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// Do you have a credit card? Then read the following.

1. Your Credit card is a loan

Your Credit card are sim­ply a mech­a­nism for bor­row­ing money. Most card­hold­ers (2 out of 3) carry a bal­ance. Card com­pa­nies earn inter­est on these accounts.

The key to man­ag­ing credit cards is under­stand­ing the terms of the credit card issuer loan.

As with any loan, you need to know:

1. Your inter­est rate
2. The amount of your monthly payment
3. When it is due
4. How you make payment
5. What hap­pens if you’re late
6. What hap­pens if you request an amount beyond your approved loan (credit line)
7. How long will it take you to pay off your loan

2. Preap­proved is not prequalified

Just because a card com­pany is will­ing to give you a loan — a credit card — does not mean that per­son has reviewed and ana­lyzed your abil­ity to repay the loan.

Some peo­ple think that if they’re offered a credit card, a banker must have con­cluded they are capa­ble of repay­ing what is bor­rowed. That’s not how it works.

3. Credit cards are going to be harder to get and to keep

Until recently, any­one who could fog a mir­ror could get a credit card. For those with a poor credit rat­ing, the terms might have been expen­sive, but credit cards were still available.

But now, credit card issuers are ner­vous about the mag­ni­tude of defaults. As a result, credit card issuers are:

1. Mak­ing it harder to get a credit card
2. Rais­ing required min­i­mum payments
3. Increas­ing inter­est rates and fees
4. Cre­at­ing new fees a card­holder must pay
5. Low­er­ing credit limits
6. Can­cel­ing cards

There­fore, it’s more impor­tant than ever to main­tain a good credit score.

4, Low monthly pay­ments are not your friend

Credit card issuers make money by lend­ing you money and charg­ing interest.

They do not like peo­ple who pay off their monthly bal­ance every month. They pre­fer peo­ple who make the min­i­mum monthly pay­ment and carry a bal­ance. The higher your bal­ance, the more they like you.

That’s why credit card issuers make the monthly min­i­mums so low. The less you pay every month, the higher your bal­ance. Those who pay only the required min­i­mum often dig them­selves into a hole.

Min­i­mum Pay­ments = Max­i­mum Problems.

5. The Credit Card Act lev­els the play­ing field between card com­pa­nies and cardholders

Effec­tive Feb­ru­ary 22, 2010, the law changed in sev­eral impor­tant ways.

1. Credit Card com­pa­nies can­not change inter­est rates dur­ing the first year after a card is issued unless: a) a spe­cial offer expired, b) the rate is vari­able and the index rate changed, or c) the card­holder was more than 60 days late with a payment.
2. Card com­pa­nies can­not change any impor­tant term in the card agree­ment, includ­ing inter­est rates after the first year, until they give the card­holder not less than 45 days advance notice. The card­holder can elect to ter­mi­nate the card if unhappy with the new terms and pay off the remain­ing bal­ance at the orig­i­nal rate. (Note: this may affect your credit rat­ing, though.)
3. The credit Card com­pa­nies have to ask card­hold­ers whether they want over-the-limit card pro­tec­tion. If the card­holder says ‘No,’ then the card com­pany can refuse to pay pur­chases in excess of the card’s limit.
4. Card com­pa­nies must mail invoices at least 21 days before they are due.
5. Credit Card com­pa­nies must give card­hold­ers promi­nent notice in invoices as to how long it will take to pay off a bal­ance by only mak­ing the min­i­mum monthly payments

Also Read this if you have a credit card