November 12,2008
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Credit Card Tips: 101, Pt.4
– Learn 3 terms, use checklist. Simple.Tip No. 4: Learn three terms.
The plethora of standard terms of a contract are usually intimidating to the point that people give up and hope for the best. Not necessary with credit cards. Learn just three:
1) Purchase APR: Mostly all you'll ever need. After 6 months to a year, 0% may jump quickly and sharply (not by surprise, you'll know months ahead of time.) That may be the time to consider rolling all your debt to a new credit card. The terms you need next are ‘Transfer APR' and ‘Transfer Fee'
2) Transfer APR: Obviously, the interest you'll pay every month for the balance that you transfer to this credit card. Important to note here, if the ‘Purchase APR' isn't 0% (you'll rarely find both 0% on the same card), then, if you make any purchases on that credit card, they will never be paid on until the transferred balance is completely paid off. Use this card only for the balance transfer, never make any purchases on it.
3) Transfer Fee: The hidden clause. It's usually 3% (with a minimum attached) of the amount you transfer to this credit card. So, to avoid this hit, make sure it is 0% also.
This is a good primer and should cover the everyday needs of credit cards. Note these points covered:
q Get the first credit card, even if it costs a little.
q Sign the card immediately.
q After signing the back of the card, write in parens (Ask for picture ID).
q Always use card responsibly, never charge more than you're sure you can pay back soon.
q Build rating for three months by using the credit card frequently, even for small things.
q By all means, don't ever over-charge the card.
q As soon as monthly statement arrives, check it for accuracy. Look for hidden fees you didn't expect.
q Always pay early, as soon as you get the statement.
q Always pay at least $1.00 above the minimum required.