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Keep track of every credit purchase you make each month. This will help establish your monthly credit “budget” and spare you eyebrow-raising surprises when your bill comes.
Plan your credit spending. Use your credit for planned purchases that you intend to pay off over a specific time period. Impulse buys for “unbeatable” prices can stay on your bill for months, costing you more in the long run.
Before taking cash advances, consider the associated fees and finance charges. They can be much higher than the interest on purchases.
Avoid approaching or reaching your credit limit if at all possible. You’ll save on finance charges and keep credit available for emergencies like car repairs or unplanned medical costs.
And keep an eye out for these warning signs:
You’re only able to make the minimum payment on your credit cards for two months in a row.
You’ve taken more than one cash advance (outside of travelling) in the last 90 days.
You’re surprised by the number of new purchases on any of your credit cards.
You’ve done more than one balance transfer in the last six months.
You reached or exceeded the limit on any credit card in the last three months.
You need to work overtime or a second job to keep up with your consumer debt payments.
You’ve made more than one late payment to a credit card or secured loan account in the last 12 months.
As we’ve noted, no one of these problems will hurt your credit score dramatically. But several of them happening at the same time can do real damage.
With a strong credit score, you will receive a steady stream of offers for credit cards, car loans and home mortgages. Some people work hard to have their names removed from any such mailing lists.
But these mailings can be useful to you, since they show you what the state of marketplace is for consumer credit deals.
Plus, occasionally, you may see an offer that’s really better than anything you have.
If you decide to get a new credit card, make sure the terms are genuine—and permanent, not “promotional”—and that the credit card offer is really better than the cards you have.
Try to keep no more than four active credit card accounts. If you find a really good offer, replace a card that costs you more. And take your time doing so.
In most cases, you shouldn’t close out your oldest card. It has the most history and adds stability to your score. Generally, it’s good to have had your credit card accounts for an average of at least three years.
Slowly close out unneeded or unused credit accounts. And, be cautious when canceling—because closing accounts can negatively impact your credit score.
Even if creditors offer to raise credit limits, allow yourself only moderate credit limits.
Moving a card balance from a higher interest rate card to a lower interest rate one can make sense and save you money. But move carefully on these deals-and, in any case, don't do them more than once or twice a year.
Under the method of payment allocation used by MBNA, Broder's cash advances subject to the 6.9 percent rate were reduced by the amount of his monthly payments while his purchase balances remained wholly unpaid and continued to accrue finance charges at the higher rate.
Perhaps the most interesting conclusion the court made about Broder’s charges involved a literal discussion of the term small print. Some of MBNA’s contract language about how it would allocate payments was—literally—in small print. And New York had a law about jamming weasel words in tiny type. The court cited state law which said:
Contracts in small print
The portion of any printed contract or agreement involving a consumer transaction ...where the print is not clear and legible or is less than eight points in depth or five and one-half points in depth for upper case type may not be received in evidence in any trial, hearing or proceeding on behalf of the party who printed or prepared such contract or agreement, or who caused said agreement or contract to be printed or prepared. …No provision of any contract or agreement waiving the provisions of this section shall be effective.
Although the statute referred to evidence admissibility in trials, its purpose was to make such contract provisions unenforceable. The relevant language about payment allocation contained in the MBNA’s solicitations was smaller than the required eight-point type.
The court also allowed the deceptive practices claim to go forward; but it did throw out the fraud charge essentially for being redundant to the others.
And the court certified Broder’s lawsuit for class action status. Anyone who’d taken a cash advance or transferred a balance from MBNA during the same period could join him. The ruling was a substantial loss for MBNA, which promptly began negotiating a settlement with Broder.
Your credit card provides you with valuable purchasing power and convenience. To purchase a number of goods and services, all you need to do is present your card and sign a receipt. Unfortunately, this power and convenience also make your card that much more appealing to criminals looking to take advantage of your credit.
If a credit card is used before you report it lost or stolen, your maximum liability for unauthorized charges is $50 per card. If you report your card stolen before someone uses it, your liability may be zero.
But, if a member of your immediate family (spouse, child, parent) borrows your credit card to make a purchase—with or without your knowledge—you may be liable for that purchase.
Notify your card issuer if you and your spouse become separated or divorced. Otherwise, you could be liable for charges on your joint account.
Billing errors can happen. So it's important to save your receipts and credit slips and compare them to your monthly statements. File your statements in a secure place for future reference.
If you choose not to keep your statements, destroy them before throwing them away.
If you do discover an error on your statement (like an unauthorized charge or purchase), write to your card issuer immediately. Be sure to state that it is a billing error, which is handled differently than a dispute with a merchant.
Remember: You must notify your credit card issuer in writing to be legally protected. Also, it is far more difficult to challenge a charge once it has been paid.
Although the numbers are increasing, consumers are still not using their credit cards on the Internet nearly as much as electronic retailers would like. That's why many online merchants continue to offer a toll-free order number so that shoppers have the choice of calling their order in.
These tips are important and universal:
Sign your card—as soon as you receive it. (Obviously, this is only as effective as the clerk who’s checking it.)
When you use your card at an ATM, enter your PIN in such a way that no one can easily memorize your keystrokes.
Don’t leave your receipt behind at the ATM. Your PIN and account number from a discarded receipt could make you vulnerable to credit card fraud.
Don’t give your credit card number over the telephone unless you initiated the call.
Make certain you get your card back after you make a purchase (one way to dot his: leave your wallet open in your hand until you have the card back). Also, make sure that you personally rip up any voided or cancelled sales slips.
Keep a list of your credit cards, credit-card numbers and relevant toll-free numbers in a safe place, in case your cards are stolen or lost.
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