credit

Guidelines for using credit responsibly

Now that you’ve been approved for a credit card, the real challenge begins. It is how you use that credit card that will determine your level of responsibility toward your personal finance. Here are a few guidelines that you should follow in order to start using your credit responsibly.

Know the terms.
Whether you have a credit card or a loan, it is important that you know the terms of the agreement. Find out what the APR is. Are there any fees associated with the loan or credit card? What about if your payment comes in late? Make sure that you know everything associated with your loan or credit card.

Keep important numbers.
Keep a copy of each credit card and loan account number. You should also keep a copy of the customer service telephone number. Your account number is very important. It identifies you. You should keep a copy of each lenders phone number in case of bill questions, and card cancellations.

Carry only a couple of cards.
Carrying all of your credit cards is a bad idea. If you lose your wallet or purse, you will lose all of your credit cards and increase your risk of being a victim of identity theft. You will also have to call each and every credit card company to cancel your cards, one by one.

Another good reason to carry only one or two cards is that you won’t be tempted to buy on impulse. Believe it or not, many people get into credit card debt simply because of buying on impulse. They buy something they think that they want, only to find out that they really don’t need it.

Make payments.
Never go a month without paying your credit card bills or loans. B not making at least the minimum payment, you will be slapped with late fees, a higher interest rate, a possibility of the missed payment going on your credit report. Make sure that you pay at least the minimum payment, although not advised, making a minimum payment is 1,000 better than not making a single payment.

A better way to go is to pay a little bit more than the required minimum payment. By paying a little more than the required minimum payment, you will pay your debt off in less time.

The best way to go is to pay the balance in full each month. To do this, make sure that you only charge an amount that you can afford to pay off once the bill arrives. By paying off the amount in full, you will less likely eliminate interest charges and you will not have to worry about accumulating debt.

Pay on time.
A lot of people send in their payments on the due date. That is not the case. You should send in your payments well before the due date. The credit card companies are not responsible for the amount of time it takes for a bill to arrive at their door. Make sure that your payment is in the mail at least 7 days before the due date to assure prompt delivery.

If you have access to a computer, sign up for online payment thru your bank. Many banks now offer online bill payment free of charge. If your bank does not offer this priceless service, or if they charge for the service, it is time to switch banks. Online bill payments usually take no more than 2 business days to get to your creditor.

Keep records of payments
Sometimes your account is not credited when payments are made. You need to keep a record of every payment made incase of a blunder on the creditor’s part. Your only defense is the proof that you possess. Make sure you keep records of your payments.

Review your statements.
Every time you receive a statement from your credit card company, sit down and review it. A lot of people simply don’t care to review their credit card statements. Make sure that all purchases that appear on the statement were performed or approved by you. If a purchase that you’ve never made appears on your statement, you should immediately call your credit card company to dispute.

Spend wisely.
Your credit card is not free money. A lot of people think that a credit card is free money but it isn’t. As a matter of fact, if not used carefully you end up paying more for the items your purchase by using a credit card than in cash. Don’t make frivolous purchases with your credit card. Ask yourself if you really want that new pair of shoes, or if you really need another pair of jeans.

The most important thing to remember is that you have to stay on top of your finances and credit. Don’t allow your spending habits to control you.

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Why do you need credit?

In today’s world, unless you are fortunate enough to have an unlimited supply of money, you will need credit. Credit can be summed up as the amount of money at your disposal for a variety of purposes.

When you finally get ready to buy that dream house you always wanted, your credit is going to determine whether or not you are approved for the loan. When you go on vacation, the hotel is going to ask you for a credit card in order to get your room. In order to make purchases online, you will need some type of credit card to complete the transaction.

You need credit in order to make everyday purchases. You need credit in order to make hotel or travel reservations. When you are ready to buy a house or borrow a large sum of money, your credit plays an important role in the banks decision to lend you the money. Your credit is your trustworthiness; your credit is your bond. Take good care of it, and it will take good care of you.

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A parental guide to students and their credit

The Sad Statistics Regarding Students and Their Use of Credit Cards

So where did you learn about handling money…when you were a student at your parents’ knee or in the school of hard knocks dealing with loads of debt from excessive use of your credit cards? And where do you think OUR kids should learn? The sad fact is that since our educational system doesn’t teach sound money management, there are really only two places our kids can learn: from us - their parent’s, or on the street.

And wouldn’t you think that learning from someone who’s experienced the hard-knocks is definitely better than letting our children suffer through the alternative…. Right? Well, lets see how we’ve been doing:

* we’ve given nearly one third of all high school students at least one credit card for their personal use, with at least half of those in the student’s own name;

* we’ve given more than three quarters of all college and university students personal credit cards, who carry a typical balance just under $3,000, with fully ten recent carrying a balance in excess of $7,500, and,

* we’ve arranged it so that, last year, just under 100,000 adults aged 25 or less were required to file for bankruptcy to keep from going under.
Teaching Your Student How to Use Their Credit Card Wisely

Well, whatever it is we’re doing, it’s pretty clear we could be doing a better job. What to do?

1) Well, about the time our kids are in sixth grade we should be teaching - actually, at this stage it’s really just talking to - our kids about banks, banking, and interest rates… nothing complicated, just what they are, why they’re there, how they work, saving and borrowing… topics like that. Your goal is to make sure that by the time they’re in high school they understand banking fundamentals.

2) When our students enter high school, they should be ready (at least they’ll tell your they’re ready) to exercise a bit more financial responsibility. Since they should already have a savings account (grade school stuff, right? ), help your son or daughter open a checking account.

They should learn how to write checks, keep track of and reconcile their balance, learn the facts about overdrafts and associated fees, etc. A debit or pre-paid card might be worth considering when they’re a junior… to learn a bit of self control. The goal is to have them fully versed in money management before they’re out of your sight and you’re out of their mind.

3) So your kids are at college and, hopefully, they already have a good grasp of the fundamentals. This is the perfect time for them to start building a credit line of their own by applying for a student credit card under their own name, without your co-signature. After all, they should already know to not carry a balance and pay their bills on time, right?

We’re done, right? Well, not quite.
Continuing Education for Students Learning to Use Credit and Credit Cards Wisely

Unfortunately for us, that’s not the end of it. There are a few more teensy lessons they need, like how much debt is safe to carry, how to use debt to actually improve credit ratings, how credit ratings are established (and if you don’t know yourself, that’s a whole other story…), and how taxes and other kinds of activities affect credit ratings. If you’re a bit shaky on some of these topics yourself, take heart… you have plenty of time, right? And, exactly how old did you say your kids were?