Tips from the Trenches


If you have a $1000 unpaid balance on a credit card that charges you an annual interest rate of 18% and you pay a minimum 5% monthly, it would take you 8 years and 3 months to repay the debt - and cost you $382 in interest payments alone. You' ll end up spending $1382 to pay for the $1000 you spent - 38% more than the actual cost of what you bought!

Lesson: Pay your credit card balances in full every month.

What About Your Credit Card?

Is it the best one for you? Do you know the differences between various credit cards? Have you read all the tiny print that explains the payment terms, conditions, and late payment penalties for which you are responsible?

Shopping for the right credit card is an easy research project well worth your time. First, you'll need to consider how you will use your card. Then you'll have to compare interest rates and payment cycles, transaction fees, card fees, the impact of multiple APRs, how finance charges are calculated, your liability limits and how billing errors are handled, differences between charge cards and debit cards, among other things. It's easier to do than it sounds!

The Federal Reserve Board offers excellent information to help you choose the credit card that's best for you. Just log on to their excellent web site: and explore Choosing a Credit Card.

You can also click here and go to Shop: The Card You Pick Can Save You Money, an informative 13-page pamphlet published by the Federal Reserve Board. Among its information is an important section entitled Credit Card Shopper's Checklist - a must for every smart comparison card shopper.

The most important thing to remember about credit cards is that the credit they offer isn't free. It's actually very expensive. The interest rates charged on unpaid balances are often as high as 18% to 21% - sometimes even higher! If you do not pay your credit card bills in full every month you risk accumulating credit card debt, traditionally the single biggest obstacle to saving.

Powered by