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Short Description: The Basic Facts of Credit. Sure, a credit card means money and freedom. ... If you have a credit card or are thinking about getting one, here are a few ...
Content Inside: CollegeCredit® Lender Code: 830310 www.collegeboard.com Credit Card Smarts The Basic Facts of Credit. Sure, a credit card means money and freedom. But using a card too often can lead you right into financial disaster. Before you know it, you're charged to the max of your credit line, you can't make the payments, the bank is really on your case, and you're stuck in the credit trap. Say goodbye to that good credit rating you worked so hard for. If you have a credit card or are thinking about getting one, here are a few basic facts to keep in mind: · Credit cards make sense when you save them for a real emergency and pay off the entire amount you owe when you get the bill. · VISA, MasterCard, and department store credit cards are really high interest loans in disguise. You'll pay as much as 23 percent interest (called a finance charge) on the portion of your bill that you don't pay off at the end of the month. You may also have to pay an annual fee just for having the card. Then there's the fee for using your card to get a cash advance (a very bad idea), and yet another hefty fee each time your payment is late. · Credit cards cost you a bundle -- just check out the numbers: If your average unpaid credit card bill over the year is $500, and the finance charge is 20 percent, you're paying $100.00 ($500 x 20 percent) just in finance charges each year. Now figure in the $20 annual card fee, and another $25 because your payment was late one month. That credit card is costing you a whopping $145 a year ($500 x 20 percent = $100 finance charge + $20 annual fee + $25 late payment fee = $145.00). And that's in addition to the purchases you've charged on your credit card! It's a vicious cycle -- before you know it, you can only afford to pay off the monthly finance charge and you never get rid of the debt. Use cash instead of plastic and you'll save yourself a ton of money. Be Credit Smart. When you sign up for a credit card, you're signing on for a big responsibility because it's you who will be responsible for paying those bills. Follow these Golden Rules of credit management and you'll lead a financially healthy life: · Use credit only if you are certain that you will be able to repay your debt. · Think through your purchase carefully before you say, "Charge it." Never, ever, use a credit card on impulse. And never use it to lift your spirits because you'll be even more depressed when it's time to pay the bill. · Save your credit card for a real money emergency. Using a card to pay for Spring Break vacation is neither an emergency nor a good idea. (more)
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