Week 2: Credit Cards

Credit cards- you can't live without them, but make sure you are living with them intelligently. Take a look at what's in your wallet:

1) Call each of your credit card companies and ask for an interest rate decrease. You don’t have to give any reason. The worst they can say is NO, but if you have decent payment history, often they will say yes.

2) Try to have at least one credit card that you pay off each month. That way, no interest will accumulate.

3) If you carry a balance, try and pay more than the minimum payment. It will take an impossibly long time to pay it off if you pay just the minimum.

4) Make sure your card has no annual fee. If it does, see if they can waive it. If not, maybe you should cancel it.

5) If your card offers rewards, are you claiming them? I like to get cash applied to my account, but sometimes they offer gift cards to stores at better values than straight cash. Sometimes I get the Home Depot card, because I know I'll use it on things I actually need instead of an Orange Mocha Frappuccino splurge on a Starbucks card.

6) Get a free annual copy of your credit report from each of the three credit reporting agencies by calling 1-877-322-8228 or online at www.annualcreditreport.com Check for any discrepancies and report them immediately.

7) Close any credit cards you don’t use. You don’t need the hassle of losing the card or getting it stolen, and too much open credit can negatively affect your credit score.

8) Try and see what benefit you are really getting from your credit card. I found that my DiscoverCard, with no annual fee, was a better deal than my Citibank AA card where I received one mile per dollar. Here was my logic: If I put $25,000 per year on either card, I would receive a minimum of $250 cash back from Discover. With the Citibank card, I would get one round trip in the USA, but the dates were restricted, I had to pay an annual fee, and I wouldn’t earn miles on my actual flight. I found I could just buy a round trip ticket for around $250, if I shopped wisely.