What You Should Know About Credit Cards Before Using Them

Written by: MoneyPrime Staff
06/04/2019

credit-cards

I wish I had known about some of these suggestions several years ago. I too found myself in credit card debt, like so many others. It got so bad that I had to ask for help. The experience did teach me a lot. My hope is that some of my own experience can help some of you out. That way you do not make the same mistakes I did.

1) The first thing you should do is choose a card that can work to your benefit. Do you get out to dinner a lot? You may want to get a card that can give you discounts and other such luxuries. The idea is to use the benefits you get, and not just rack them up for bragging purposes.

2) There are some who like to “earn as they spend.” That is great, but you should choose how you earn your points selectively. Some cards will only let you use the points at specific places. That is not going to help someone who wants to use their points at The Olive Garden when they cannot be redeemed.

3) You should try to pay down every purchase you make as soon as you make it. I have made this mistake too many times. Guess what? The balance is rolled over to the next cycle. Your card could charge you anywhere from 23% to 40%. You will owe more in interest than in principal after a while.

4) Consider paying your bills on time, even if you cannot pay everything in full. Not paying on time will make a dent in your credit score. Say you go to open up a new account. You could have a black mark on your record before you start.

You will get declined, or worse, they will raise your rates before you start using the new card. That is not something you want to mess with.

5) Try to redeem your benefits as much as you can, as soon as you can. The company is not giving them out for you to stack up and use for a rainy day. Points that are not redeemed by a specific date will become bull and void.

It is similar to using vacation days at work. You cannot roll them over until you are ready to use one. You either use them or not.

6) Try to limit the credit cards you use in your home. You may need one or two for you and your family. You should rely on those cards only. Keep one around for emergencies and say no to the rest. Too many people have gotten into trouble by opening more cards than they could handle.

Some make the mistake of transferring old balances to a new card with a higher limit. They start to assume that they can “pay it down in no time.” I made this mistake too. Things do not work out that way most of the time. You just end up with more debt.

7) You may find some cards come with extra perks for you and your family. They may not make a lot of purchases, but you may want to consider adding them. One or two large purchases every so often will translate to a lot of big savings for you and your family.

How To Handle Debt Collections With Regards To Your Credit Cards

It happens to the best of us. We think our spending is under control when it is not. Some of you may be facing delinquency and debt collections right now. In simple terms, you are being punished for something when you should not be.

1) You need to know your rights. According to the Federal Trade Commission(FTC), you do have rights. Your debt collector does not want you to know you have rights because they have less control over you then.

Familiarize yourself with this link https://www.consumer.ftc.gov/articles/debt-collection-faqs if you can.

Think of this as a battle. You would not go into battle without the proper weapons and artillery, right? The same thing applies here. The link above can become part of your tools to help combat the system, especially when the person is going after you in an unjust way.

You can also file a complaint with the CFPB at https://www.consumerfinance.gov/complaint/. Phone number is 855-411-2372.

2) Do not keep your head buried in the sand like an ostrich. Their mindset is directed toward “See no evil, hear no evil, know no evil.” The debt collector may be evil, but there could also be a valid reason for him calling you.

The debt may be in someone else’s name, but you are being asked to pay the bill. You have a 30-day window to tell your side of the story. You have 30 days to file a form and set the record straight.

You may be innocent, but the debt collector will go to any lengths to paint a black mark on your record. Some people choose not to talk to the debt collector. I have made that mistake too. The reason is that the person could not be reasoned with. I am not saying it was the right thing to do, but it was my best option at the time. The communication becomes less and less friendly when you make that choice.

Try to keep things open and honest if you can.

3) You may need to find a lawyer if things get heated quickly. It is not best to handle it yourself when that happens. Find a consumer advocate with a law degree.

Some consumers have had their wages taken away. That happens due to the debt collector being out for blood. That is why you need someone experienced who can help you, especially when the collector has very little proof of what has happened.

Some debt collectors hedge their bets with very little to back it up. The only advantage the person has is the consumer remains in the dark about what is happening.
It is like playing poker when the house continues to stack the deck against you.

4) Keep a record of everything said done, especially on the phone. You need to back up your claims with an iron-clad case. There are some people who are harassed after more than 20 years. There is usually a statute of limitations, but that does not matter to some debt collectors. You need to protect yourself.

5) Your bank records and accounts need to be locked. Debt collectors cannot take your bank account unless it is issued by a court order. They need to have an ironclad case against you to do that, or else it is illegal.

Debt collectors cannot take your accounts when your funds are used for exempt purposes. Did you file bankruptcy recently? You may have some help there because bankruptcy will protect you to a certain degree. Talk to your lawyer before you do it though.

6) Some may ask for your banking and routing numbers. Experts advise against doing that. You are making it too easy for them to claim something that may not be theirs. Payments should be made with third-party people or money order. Amscot is a great option if you live in Florida.


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