Five Credit Card Do's

These days, everyone is thinking about how to handle their credit cards in the most efficient and responsible way. Here are five Credit Card Do’s to try:

Pay your credit cards off in full every month

After you learn to control spending and reach your savings goals, you can start using credit cards carefully, charging only the amount that you can pay off fully each month. Surely, you've noticed how interest charges quickly and quietly eat up your income. Now, you will never waste money on interest again.

How will you know what your balance will be each month on each card? Just keep a memo of the date, the amount, and the location of each purchase. That way, when the bills arrive, you will be prepared.

Report lost or stolen credit cards immediately

Most credit card companies have toll-free numbers and 24-hour service to report lost or stolen credit cards. Keep a copy of the front and back of your credit cards at home, so that this information is readily available. Once you have reported the loss or theft of your card, you usually have no more responsibility for unauthorized charges beyond $50 per credit card.

Acquire credit cards carefully

Some credit card companies offer a "fixed" interest rate. But the "fixed" rate can change without notice. Check your statement every month to see if the interest rate has been increased. If so, call the credit card company to complain. The Federal Reserve is trying to require credit card companies to commit to a specific time period before they can raise the "fixed" interest rate on their cards. However, at the time of publication, this has not been accomplished.

Credit card "enhancements," such as travel discounts, gift certificates and other deals are designed to lure you into obtaining and using credit cards. Face it, once you receive a card, it's hard not to use it and dig yourself deeper in debt.

Buff up your credit rating

One missed payment can lower your credit rating by as much as 100 points. Overdraft charges affect your credit rating, too. A poor credit rating can prevent you from buying a home or obtaining a loan. Banks and credit card companies offer lower interest rates to consumers with good credit ratings. A lower interest rate means you save when you need a loan. What is your credit rating, as of today? One way to find out is to go to www.myfico.com.

Get help if you need it

You may have more debt than you can handle by yourself. More drastic measures are required, such as negotiation with your creditors for debt relief.

Get counseling if necessary

If you are having trouble making your monthly payments, here are some useful websites for credit card debt counseling:

• http://www.consumerlaw.org/
• http://www.creditguard.org/ 
• http://www.familycredit.org/ (very useful free booklets on saving) 
• http://www.myfico.com/ (free booklets and a free newsletter about how to save) 
• http://www.usoba.org/ under the consumer link (government advice on choosing the best credit reduction strategy; free newsletter and money saving tips), and 
• www.ftc.gov/bcp/online/pubs/credit/repair.shtm (government advice on choosing the best credit counselors) 
• You can also contact the National Foundation for Credit Counseling at www.nfcc.org (800-388-2227).

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com