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Choosing and Using Credit Cards

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Choosing and Using Credit Cards How to Avoid What To Do If You Are Credit Card Debt Overwhelmed By Debt Choosing Only spend what you can afford. Contact your creditors directly. Many credit Remember that credit is a LOAN — not a gift. card issuers may lower your APR or remove and Using Credit card companies make their money fees if you ask. This may only be an option when you don’t pay your bill in full at the if you have paid your bills on time and are end of the month. “Borrowing” money from not over your credit limit. Credit Cards your credit card company can be more Consider contacting a credit counseling expensive than borrowing from a bank. service. These agencies provide money management, debt reduction and financial Never “max out” or exceed the limit on your education services. Free or low-cost credit card. Over-the-limit fees can raise consumer counseling can be obtained from your interest rate, make it difficult to pay the National Foundation for Credit down your debt, and will reflect negatively Counseling. Call 1-800-388-2227 or visit on your credit report. www.nfcc.org to find a member agency Avoid using your credit card for cash near you. Overwhelming credit card debt can advances. The fees and interest on such Consider filing for personal bankruptcy only happen to anyone: college students transactions are excessively high. as a last resort. Bankruptcy is expensive with their first credit card; an average and the effects remain on your credit Keep credit card receipts to verify the report up to 10 years and may hinder your family that spends too much today charges on your statement. Contact your ability to obtain credit, a job, insurance and and saves too little for tomorrow; or credit card company immediately if there senior citizens living on a fixed a place to live. are any errors. You must dispute the errors income with unexpected expenses. Avoid credit-repair companies that claim, within 60 days of the billing statement by for a fee, they can solve your debt The New York Department of State’s sending copies of any documents problems, clean up your credit report, or Division of Consumer Protection has supporting your claim. You may withhold get you a loan. prepared this brochure to help you payment for what is in dispute while it is being investigated. (The creditor must Once you pay a balance in full, stop using choose and use credit cards wisely. resolve the dispute in 90 days, or within two the card. You may also choose to close out complete billing cycles, whichever is earlier.) and cut up credit cards on which the balance has been paid in full. Notify the Eliminate the temptation to open a new credit card company in writing that you are Consumer Assistance Hotline card by calling 1-888-5-OPTOUT. This will closing the account. remove your name from marketing lists and Report any problems with harassing debt 1-800-697-1220 prevent companies from sending you pre- www.dos.ny.gov collectors to the Federal Trade Advocating for and empowering screened and pre-approved credit offers. Commission, the New York State Attorney New York consumers General or the New York Department of ANDREW M. CUOMO ROSSANA ROSADO State’s Division of Consumer Protection. GOVERNOR SECRETARY OF STATE Credit card debt has a devastating effect on 2. Decide how you want to use your card. If Common Credit Card Fees the lives of millions of Americans. The you want to carry a balance from month-to- average consumer now carries four (4) month, use a card that carries a lower Annual or membership fee – Yearly credit cards with an average total interest rate (known as Annual Percentage charge for having the card. outstanding balance of approximately Rate or APR). $9,000. Cash advance fee – Imposed when 3. If you expect to pay your monthly bill in Choosing the right credit card and using it you use the card for a cash full, choose a credit card company with a wisely can keep you from falling into advance; usually a percentage of beneficial rewards program or your best serious, long-term debt. the cash advance (for example, 3%). choice may be a card that has no annual fee and offers a longer grace period. Balance transfer fee – Assessed Tips on how to find the when you transfer a balance from right card… one credit card to another. WORD TO THE WISE: Late payment fee – Charged if your 1. Compare credit card offers. Contact payment is received after the due banks or visit the online survey provided by It’s always best to pay your credit card date. the Federal Reserve System at bills in full at the end of each month. www.federalreserve.gov/pubs/shop. Otherwise, you will be paying interest Over-the-credit limit fee – Assessed costs on top of the money you owe. if you go over your credit limit. Credit limit increase fee – Imposed 4. Don’t accept credit card offers simply if you ask for an increase in your WORD TO THE WISE: because the issuer thinks you qualify. Only credit limit. you know how much you can afford to pay. Before you sign a credit application, ask Also, it may be harder to borrow money if Finance Charge – Monthly charge questions to make sure you understand you have too many credit cards. for carrying a credit card balance the terms and conditions such as fees and beyond the grace period. penalties. For example, will your interest 5. Be very wary of credit cards where you rate increase if you are late with your have to pay a fee in order to get the card. payments or late in paying other bills? These cards often carry excessive fees and low credit limits. March 2016.
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