Credit Cards
1. Use them carefully.
Credit cards offer great
benefits, especially the
ability to buy now and pay
later. But you've got to keep
the debt levels manageable.
If you don't, the costs in
terms of fees and interest,
or the damage to your
credit record, could be
significant.
2. Choose them carefully.
Don't choose a credit card
just to get freebies (T-shirts
or sports items) or because
there's no annual fee. Look
for a card that's best for
your borrowing habits.
Example: If you expect to
carry a balance on your card
from month to month,
which means you'll be
charged interest, it's more
important to look for a card
with a low interest rate or a
generous "grace period"
(more time before your
payments are due).
3. Pay as much as you can
to avoid or minimize
interest charges. If
possible, pay your bill in full
each month. Remember,
paying only the minimum
due each month means
you'll be paying a lot of
interest for many years, and
those costs could far exceed
the amount of your original
purchase.
4. Pay on time. You'll
avoid a late fee of about $35
or more. But more
importantly, continued late
payments on your credit
card may be reported to the
major credit bureaus as a
sign that you have
problems handling your
finances.
And if your credit rating
gets downgraded, your card
company could raise the
interest rate on your credit
card, reduce your credit
limit (the maximum
amount you can borrow) or
even cancel your card.
Late payment on your
credit card also can be a
mark against you the next
time you apply for an
apartment or a job.
5. Protect your credit
card numbers from
thieves. Never provide
your credit card
numbers - both the
account numbers and
expiration date on the front
and the security code on
the back - in response to
an unsolicited phone call,
e-mail or other
communication you didn't
originate.
When using your credit
card online make sure
you're dealing with a
legitimate Web site and
that your information will
be encrypted (scrambled
for security purposes)
during transmission.
Major credit card
companies also are offering
more protection by
providing "zero liability"
programs that protect
consumers from the
unauthorized use of their
card.
In general, only give your
credit card or card numbers
to reputable merchants or
other organizations.
Checks and Checking Accounts
1. Shop around for a
good deal, preferably an
account without a monthly
maintenance fee.
Banks usually offer several
accounts to choose from
with different features,
fees, interest rates,
opening balance
requirements and so on.
And remember that what's
good for your parents or
your friends may not be
best for you.
2. Keep your checkbook
up to date by recording
all transactions, including
ATM withdrawals, bank
fees, purchases you make
using a debit card, and any
other deductions that do
not involve writing a
check.
Also promptly compare
your checkbook with your
monthly statement or
review your account
information online or by
telephone.
3. Avoid "overdrawing
your account," which can
happen if you write a
check or otherwise
attempt to withdraw (by
mistake) more money than
you have in your account.
It also is possible to
overdraw your account
using your debit card at
the ATM or when making
a purchase. These
transactions can be costly.
(See Page 4 for more
guidance.)
4. Consider Internet
(online) banking. This
service allows you to make
payments or move money
from one account to
another through your
bank's Web site instead of
(or in addition to) writing
and mailing paper checks.
This saves on the costs of
postage and buying paper
checks.
Online banking also allows
you to monitor your
account without having to
wait for a statement in the
mail.
5. Pay attention to your
bank statements.
Immediately report any
errors or unauthorized
transactions (to protect
yourself from accusations
that you were negligent in
managing your account).
Look at your statement as
soon as possible after it
arrives in the mail or
monitor your account
more regularly on the
Internet or through your
bank's telephone banking
service.