Developing a Credit Card Conscience

A credit card measures in at just 3 3/8” x 2 1/8” . How you use this small piece of plastic determines your credit report status. If you’d like to buy a car, eventually own your own home, apply for a loan or even establish a cell phone in your own name, a good credit report is extremely important.

When it comes to being a conscientious credit card holder, the University Collections Office maintains several helpful tips on wise credit card usage.

The next time you’re in the checkout lane, consider the following tips before automatically reaching for your plastic:

Reserve your credit card for emergencies.

Don’t charge what you can’t afford.
Realize that you will have to eventually repay your credit card company, and if you don’t pay them off in a timely manner you could be paying extra – due to interest – than the original cost of your items.

Beware of “impulse” purchases and splurging.
Learn to differentiate “needs” from “wants.” If there’s an item that you’d readily purchase on credit but are hesitant to spend the cash on, re-evaluate the necessity of the item.

Use your debit card instead of your credit card.
Since your debit card automatically deducts money from your checking account, you’re spending money that you already have, and that you won’t have to later pay interest on.

Avoid keeping a high balance.
If your credit card balance seems to be increasing each month, re-evaluate what you’re purchasing on your credit card. Be aware of finance charges that can add up and cost you more than the minimum payment due.

Make more than the “minimum amount due” each month.
By only paying the minimum payment each month, you run the risk of racking up finance charges. Example: If you have a credit card debt of $2,500, at a 17.9 percent interest rate, it would take 15 years to pay it off if you only paid the minimum amount due each month.

Carefully review each credit card statement you receive in the mail to ensure accurate billing.

Periodically check your credit report.
Except under certain circumstances, there is a small charge for checking your credit report. The three primary credit bureaus are Equifax, Experian and TransUnion.

*Note: Never give personal information to someone unless you initiated the contact, on the telephone, by mail or on the web.

For more tips on establishing good credit, money management, debt counseling and how to establish a budget, visit the University Collections Office Web site.

Also in the Spotlight: