Signing up for a credit card is entering into a serious relationship. And just like you’d get to know someone before dating them, its important to become acquainted before committing to just any credit card company that courts you. That plastic in your pocket can rapidly take on a life of its own, and when it does, the rules of relationships apply:
CONSIDER YOUR OPTIONS
If you’re not getting an attractive offer, don’t forget about all the other fish in the sea of credit card companies. "Credit card companies regularly solicit prospective and existing customers with better terms and interest rates to ensure that responsible users of credit have access to the best financing opportunities," according to a report recently released by Your Credit Card Companies, a group of financial service companies that educates consumers on smart spending. If your credit card isn’t fulfilling all your heart’s desires, it may be time for some tough love.
As any psychotherapist would tell you, the key to a successful relationship is communication. The language of credit cards is currency, and you need to correspond by sending a check each month in order to establish good credit and keep your interest rates down.
"Even when I can’t pay my credit card bill in full, I make the minimum payment to preserve my good credit," said John Wooten, a senior at New York University. "You miss one payment, and your credit is shot."
Your partner wouldn’t be too happy if you saw each other every night one week and not at all the next, right? Simply put, your Mastercard requires the same level of management as your mate. Come up with a reasonable spending schedule and stick to it! Be aware of how much you’re spending so if you go over your budget you can fix the problem before things get out of hand. Your Credit Card Companies warns that when consumers accumulate debt, credit card companies often hike interest rates because of the increased possibility of default, further exacerbating the problem.
Your relationship with your credit card company should be exclusive, and it’s important to make sure no third party comes between you. Your Credit Card Companies advises consumers to obtain credit reports every year to make sure nothing shady is going on. Credit reports are cheap, easy and essential to obtain. If you suspect fraud or have been denied credit, you are also entitled to a free report, and beginning in December 2004, the three major credit bureaus started offering free annual reports as part of the Fair and Accurate Credit Transactions Act of 2003.
Apply these lessons from the laws of love, and your American Express will put you on the fast-track to financial success!
© 2008, Young Money Media, LLC. All rights reserved.
Credit Wise Students
- The average balance of $552 for a college student account is approximately one-third the size of the average balance of a non-student young adult’s account ($1,465) and one fourth that of an average older adult’s account balance ($2,342).
- College students are more likely to pay off their credit card balance in full each month than older adult accountholders.
- 87.9% of college student accounts are current (paid as agreed) compared with 88.4% of young adults and 91.9% of older adults.