(continued from Getting Credit: The Fine Print)…
Whether you shop online, by telephone or by mail, a credit card can make buying many things much easier; but when you use a credit card, it’s important to keep track of your spending. Incidental and impulse purchases add up, and each one you make with a credit card is a separate loan. When the bill comes, you have to pay what you owe. Owing more than you can afford to repay can damage your credit rating.
Keeping good records can prevent a lot of headaches, especially if there are inaccuracies in your monthly statement. If you notice a problem, promptly report it to the company that issued the card. Usually, the instructions for disputing a charge are on your monthly statement. If you order by mail, by telephone or online, keep copies and printouts with details about the transaction.
These details should include the company’s name, address and telephone number; the date of your order; a copy of the order form you sent to the company or a list of the stock codes of the items ordered; the order confirmation code; the ad or catalog from which you ordered (if applicable); any applicable warranties; and the return and refund policies.
Finally, if you have a credit card, take the following precautions:
- Never lend it to anyone.
- Never sign a blank charge slip. Draw lines through blank spaces on charge slip above the total so the amount can’t be changed.
- Never put your account number on the outside of an envelope or on a postcard.
- Always be cautious about disclosing your account number on the telephone unless you know the person you’re dealing with represents a reputable company.
- Always carry only the cards you anticipate using to prevent the possible loss or theft of all your cards or identification.
- Always report lost or stolen ATM and credit cards to the card issuers as soon as possible. Follow up with a letter that includes your account number, when you noticed the card was missing, and when you first reported the loss.
Do the Math
Keep in mind that credit card interest rates and minimum monthly payments affect how long it will take to pay off your debt and how much you’ll pay for your purchase over time.
Suppose when you’re 22, you charge $1,000 worth of clothes and CDs on a credit card with a 19 percent interest rate.
If you pay $20 every month, you’ll be over 30 by the time you pay off the debt.
You’ll have paid an extra $1,000 in interest. And that’s if you never charge anything else on that card!
