Being Credit Card Savvy

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By Courtney Gonzalez

 

When I was a kid I loved The Nanny. I also thought credit card debt was inevitable as an adult. For a brief moment, love and fear were intertwined:

Fran: I pay my Master card with my Discover card, my Discover card with my Optimer, my Optimer card with my City Trust Visa.

Niles: But doesn’t that leave a very high balance on your Visa?

Fran: Exactly. And that’s why they give me an espresso machine, which I sell to pay my American Express.

Fortunately, you can avoid performing the same balancing act. Unlike 10-year-old me, know that not all cards are made the same.

Know Your Type
Evaluate a card before you apply and ask yourself if it’s going to hinder or help your finances.

  • Basic Cards – Credit cards for the sake of credit cards. These are as basic as they come, with little to no additional features. Even with a low APR, these are rarely worth your time.
  • Rewards Cards –The most popular are cash back cards. Look for a card that offers the highest cash back you qualify for. Another popular pick are cards that reward airline points. If you have a big family and need to make purchases often, you can easily rack up miles in a single year.
  • Store Cards –The APRs on these cards are usually high. However, if it’s a store you shop at frequently, they can often net you percentage discounts. If you decide to get a store card, only spend what you already have and pay it off in full.
  • Medical Cards – Used for expensive procedures and treatment plans. Usually there is 0% interest if the balance is paid within a certain timeframe. Make sure to read the fine print and calculate when your balance needs to be paid off to avoid interest charges.

Don’t Spend Imaginary Money
The biggest issue consumers run into are credit card limits. A $500 limit is not $500 of free money. Cards are good for establishing credit history, rewards earned on purchases, and savings/discounts. Money for those transactions should already be available to you, not a fictitious amount you hope to have come next payday.

Dealing with a Balance
An emergency, an impulse buy, or anything in-between. Now you’ve got a balance of money you don’t actually have. You can pay this debt down, and here’s how:

  1. Calculate your APR. Your credit card terms should tell you how much your yearly interest rate is and how it’s added to your credit card balance. You want to prepare for that interest being added.
  2. Decide how much you can feasibly pay off every month. With most cards, as the balance on your card goes down, so will your interest fees.
  3. Don’t use that card for anything else until your balance is paid down.

Credit cards are not bad. A smart credit user can easily build a healthy credit history while reaping rewards. Generations has a couple of card options to suit your needs!