Army

December 6, 2012

Holiday season is here — use credit cards wisely

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FH Legal Assistance Office


Too much of a good thing can be bad for you. The same adage applies to credit cards. With the arrival of holiday season, it’s easy to over use a credit card. One swipe, one signature, and it’s out the door with gifts in hand.

If failed travel plans leave people stranded in a strange city with little cash, it’s good to have a credit card to use for a hotel, meals and a rental car. On the other hand, frequent usage of a credit card can leave the gift shopper or traveler speechless at the end of the month when the bill arrives.

Before applying for a credit card or adding a new one, keep in mind there are many different kinds. Some have an annual fee, but charge a lower interest rate. Those who tend to carry a balance on their cards rather than pay it off each month should find a lower interest rate beneficial.
However, those who pay their balances off each month will find the interest rate does not matter. It makes little sense to pay an annual fee when credit cards are available without fees. Some cards offer money back, free airline miles, or points toward free gifts or services. Another award option allows the cardholder to donate money to a school or charity.

Follow these simple rules to keep credit card usage under control:
Avoid cash advances. While they may be a quick fix for an immediate problem, a person borrows against the future ability to pay the money back. This is a quick way to get into debt. Many credit card companies charge a large fee for each cash advance, and the interest on the advance starts to accrue immediately.

Pay the full balance each month. By doing so, a person avoids paying interest on the account. Even those who make a lot of purchases in one billing period and cannot pay the balance should send in more than the minimum payment each month. Merely paying the minimum monthly payment will cover the interest and very little of the principal debt. It could take months, or even years, to pay off the balance.

Save up for big purchases rather than putting them on a credit card. Put money aside each month until you have the full purchase price before making the purchase. Those who make a purchase on credit and do not have the money to pay the item off immediately, should set up a strict budget each month and make regular credit card payments to meet the goal of paying off the balance.

Make credit card payments on time, every time. Don’t just wait for the credit card statement to arrive before planning the monthly payment. Put the credit card due date on each month’s calendar or enter the date in your computer or Smart Phone. When making your monthly budget, plan for the payment. That way, if the statement is late or is not delivered at all, the user is still aware of their credit responsibility. Should they fail to make a payment or the payment is late, adverse information which is often hard to erase could be entered onto their credit report.

Consider using a debit card instead of a credit card. A debit card withdraws the money directly from a bank account to make a purchase. It is the equivalent of paying with cash or a check. Whereas credit cards have credit limits of thousands of dollars, a debit card is closely tied to the user’s account balance so it is unlikely funds can be overdrawn.

Those with questions regarding consumer issues may call the Fort Huachuca Legal Assistance Office and make an appointment to speak with an attorney. The number is 533.2009. Those who would like assistance with their budget, credit counseling, or other areas of personal finance can contact the Army Community Service Financial Readiness Program to schedule an appointment. Call 533.2967.




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