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The Truth about Credit Cards

May 7, 2013

The Annual Percentage Rate (APR) is a yearly measure of the cost of credit. Some cards have an APR as high as 29.9 percent, while the average percentage rate is around 19.9 percent.

How is APR the figured?

Let’s say you make a $1,000 purchase and make the minimum credit card payment of $50 – your next balance will be $950, right?

Sorry wrong. Due to the APR, you are charged a portion of interest for that balance every month. If your APR is 18 percent, your monthly interest rate is 1.5 percent. In other words, your original purchase of $1,000 with interest charges turned into $1,014.25. Therefore, if you paid the minimum of $50 towards the debt every month, it would take you 24 months to pay it all off.

It is a good habit not to charge more than you can payoff in full each month.

Credit Card Tips

Keep a record or your credit card’s customer service number or Web site address in case your card is lost or stolen. Report a lost or stolen card immediately. After the initial call to the credit card company, be sure to follow-up in writing. Remember, waiting may increase any problems.

Create a monthly credit budget and stick to it. Each month, determine purchases that will be bought using your credit card. Limit the amount to only what you can afford to pay off the next month.

Open and review your bill every month. Immediately report any billing error to the credit card company in writing.
Save your receipts for all credit card purchases. This will allow you to match the amount on the receipt to the amount on your monthly bill. Remember to keep these receipts in a secure place and shred them after you’ve approved the transaction.

Don’t pay your bills late. Late payments can hurt your credit rating. Therefore, allow enough time for your bill to reach the company by mail, pay online or at your bank.

Don’t apply for more credit than you can handle, especially is you already are carrying a balance on credit cards.

Pay off your credit card balance each month. If you don’t pay your bills right away the interest charges will add up, causing your credit card debt to increase. If you can’t pay off the monthly balance in full, I highly recommend you pay more than the minimum.

Tips to Reduce Credit Fraud

Credit Card Fraud is on the rise! Avoid becoming another statistic by following these simple guidelines:

Never give your credit card number to unfamiliar companies or on-line sites without a security feature. A rule of thumb here is if you don’t initiate the call; don’t give out your credit card number.

Don’t leave receipts, statement or other account information lying around for everyone to see.

Be careful when disposing of mail order catalogs that include a customer number. This customer number is often your credit code, which could be used by a thief to purchase products.

Rip-up or shred all pre-approved credit card offers.

Sign the back of your card as soon as you get it.

Never give ANYONE your PIN Number (Personal Identification Number)

Limit the number of cards you carry at one time.

Report a lost or stolen credit card immediately.


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