It is important to use your new credit
appropriately to avoid any more problems. Successful credit
management includes learning to be a better shopper and keeping
records of credit use and finance charges. Follow these suggestions:
* Plan how to pay for an item before purchasing
it rather than buying it now and worrying about it later.
* Track credit expenses by keeping a written
record so you know how much you charge each month. Rubber-band a
piece of paper to your credit card and promptly write the date,
amount, and merchant. This helps you to not overcharge and provides
an easy reference when reviewing your statement for accuracy.
* Keep an eye on your creditors by always reading
your statement and all inserts. Make sure you know your due date,
credit limit, APR, annual fee, minimum monthly payment, APR for
balance transfers or cash advances, etc. Creditors can change your
terms of agreement with as little as 15 days notice. If you don’t
agree with the new terms, consider canceling the account. Before
canceling, find out if the company will expect the balance to paid
in full when the account is closed or if you can continue to make
monthly payments until the balance is paid in full. Also, ask if the
interest rate changes (increases) on the balance if you close the
account. If so, wait until you pay off the balance before closing
the account.
* Develop a system for paying bills on time to avoid late fees and
protect your credit history. Know when bills are due to arrive, and
when received, put them in a safe place. If your bill does not
arrive when expected, call the company to inquire. Use a monthly
calendar to write the amount on the due date, and mail your payment
at least one week before the due date. Save credit receipts and
payment stubs for future reference.
* Don’t charge disposable items (gas, food, or
other debts) unless you intend to pay the balance off every month.
Who wants to finance a gallon of milk for 7 months?
* Transfer high interest card to card with lower
rate. Watch interest rates and always shop for the lowest rate,
while paying close attention to any fees. If you transfer a balance,
always cancel the higher rate card by notifying the company in
writing and be sure to send it to the appropriate address. Make sure
there is not a transaction charge to transfer the balance. Ask the
issuer of the new card what is the method to transfer balances. For
example, do they have payment checks they can send you? Make sure
the lower interest rate on the new card includes balance transfers.
* Only charge what you can afford to pay off each
month. Use credit to your convenience. Think of credit cards as an
interest-free loan that you pay in full every month. Limit credit
use to 15-20% of your monthly net income.
Refer to budgeting section.
* If you can’t pay off the balance, always pay
more than the minimum payment. Do not fall prey to the minimum
payment syndrome where you squeak by each month by only making the
minimum payments. Consider this example: A consumer has a credit
card with a $5100 balance at 27.99% APR. The minimum payment is $104
and the interest charge is $109. Making minimum payments, will this
ever be paid off? NO, you will never pay off this balance.
* Concentrate on highest interest credit card. If
you have more than one credit card balance, pay as much extra money
each month as you can on the highest rate account while still making
payment to the others. Once the card with the highest interest rate
is paid off, use that payment and apply it to the card with the
second highest interest rate. Repeat as necessary. | 
