| The average American spends the first six months of | | | | instance, a card you've had for a long time that is in |
| every year paying off their holiday debt from the year | | | | good standing may positively impact your credit score, |
| before. Overspending, opening new credit accounts | | | | so that would not be the one to choose to close. |
| and generally just spreading your finances too thin is | | | | 6. Pay more than the minimum balance each month. |
| especially tempting as you succumb to the "spirit" of | | | | The typical credit card purchase is, on average, 112 |
| the holidays. | | | | percent higher than if using cash. That's because |
| That spirit has Americans planning to spend an | | | | creditors make money from your interest payments, |
| average of $1,096 on holiday presents this year, up | | | | which can add up to thousands of dollars in no time. If |
| $207 from 2004. But before you dust off your trusty | | | | you only make the minimum payment each month, you |
| credit card for its busiest time of the year, read up on | | | | will end up paying much more than you intended to, |
| these 10 tips that will keep you and your credit scores | | | | and more than the purchase was worth. Even doubling |
| merry and bright. | | | | the minimum payment means that you'll pay the card |
| 1. Stay away from high credit balances and too many | | | | off twice as fast, and save yourself hundreds, if not |
| accounts. | | | | thousands, of dollars in interest. |
| Charging high amounts to your credit cards and | | | | 7. Know the credit lingo. |
| carrying them over month to month can lower your | | | | Charge cards, credit cards and secured cards are not |
| credit score, even if you are making payments. That's | | | | one in the same. A charge card, such as American |
| because the high balances could indicate that you may | | | | Express or Diner's Club, requires that you pay the |
| have bit off more than you can chew, financially | | | | balance off at the end of each month. If you are late |
| speaking. | | | | with the payment, you may be charged very high |
| Opening too many new credit or charge accounts can | | | | penalty interest charges. |
| also negatively affect your score -- it may indicate that | | | | A credit card, on the other hand, allows you to carry |
| you're spending more than you can honestly afford. | | | | over a balance from month to month. However, it also |
| 2. If a creditor inquires about your credit score, it counts | | | | allows you to accumulate interest charges. A secured |
| against you. | | | | card is a credit card that is backed by a bank deposit |
| Every time you open a new account, a creditor will | | | | by the consumer. People who may not be able to get |
| check your credit report. This is what's known as a | | | | an unsecured card can often qualify for a secured |
| "hard" inquiry, and it's figured into the formula for | | | | card and use it to establish credit. |
| calculating your final credit score. Too many hard | | | | 8. Creditors decide whether you're a good credit risk. |
| inquiries can, indeed, count against you. "Soft" inquiries, | | | | The criteria used in determining whether or not you |
| however, (such as when you inquire about your own | | | | qualify for a credit card is not set in stone and varies |
| credit report) do not get factored in. | | | | by creditor. In this way, you may qualify for one card |
| 3. Pick a card that fits your needs. | | | | but that doesn't mean you will automatically qualify for |
| There are all kinds of credit cards out there -- those | | | | all similar cards. If you are ever denied credit, however, |
| that offer airline, merchandise or travel rewards, those | | | | the creditor must give you a copy of your credit |
| that offer extra warranties or accident insurance for | | | | report, along with an explanation as to why you were |
| electronics or travel and those that offer low, fixed | | | | denied. |
| interest rates. Depending on your needs and lifestyle, | | | | 9. Know your rights if your card is stolen. |
| you should choose a card that can benefit you the | | | | Under the Fair Credit Billing Act (FCBA), consumers |
| most. | | | | can dispute certain charges on their cards and have |
| 4. Have your name taken off of credit marketing lists. | | | | limited liability if fraud occurs. The important things to |
| If you find it tempting (or just annoying) that credit card | | | | remember are: |
| companies are mailing you marketing materials to get | | | | You are not liable for any charges on your card that |
| you to sign up for their cards, you can have your | | | | appear after you've reported it stolen. |
| name removed from their lists (similar to the National | | | | Any charges incurred after the card is stolen -- but |
| Do Not Call Registry). | | | | before you've reported it stolen -- should be waived |
| You can do so: | | | | after a $50 fee. This holds true as long as you report |
| Online using the "opt-out" form at | | | | the card stolen within a reasonable amount of time |
| By calling 1-888-5-OPTOUT to request a hard-copy | | | | (usually 24-48 hours). |
| opt-out form. | | | | 10. Try to use some self-control. |
| 5. Be aware that closing an account doesn't mean | | | | Though you may be tempted to splurge on holiday |
| your score will increase. | | | | gifts or other items knowing you don't have to pay |
| Depending on the situation, closing a credit account | | | | right away, remember that the bill will eventually come. |
| could actually hurt your score because it could | | | | If you know you won't be able to pay for a purchase, |
| increase the balance-to-limit ratio. However, it may also | | | | don't buy it. Likewise, in the event you must charge a |
| raise your score if you have too many cards open | | | | large amount of money for emergency purposes, set |
| (see #1), or have no effect whatsoever. The card you | | | | up a plan to get it paid off as quickly as possible so it |
| choose to close can also make a difference. For | | | | doesn't spiral out of control. |