Get Your Worth On

Credit Cards

Oh, small shiny piece of plastic – how I love you so! You share my thrill of the (bargain) hunt, you enjoy treating me to a good meal out, and no matter where we go you are accepted with open hands. Why, then, do you taunt me with high balances and surprise fees?

Yes, I was talking to my credit card. Or should I say cards. But after a little pep talk (and some smarter usage on my part), it’s all good again between us. Credit cards can offer convenience, protection and sometimes even rewards; the trick is using them the right way.

The average credit card debt per household is around $16,000. And penalty fees from credit cards added up to about $20.5 million in 2009. Hello?! Even just thinking about those numbers makes me feel queasy. It sure seems like a lot of us have used (or abused!) credit cards the wrong way, and now we’re paying for it. Literally. And a lot.

If your relationship with your credit card has become a little jaded, here are some quick tips to getting back to better terms:

• Be selective. Limit the number of credit cards you have. Choose a couple that you truly benefit from (such as those with low rates, minimal fees, and maybe rewards), then cut up the rest so you aren’t tempted to over-spend. And be selective about when to use a credit card: is this purchase part of your budget? Could you pay for it without using credit? Is there any benefit to using credit for this purchase and does it outweigh the potential fees or interest?
• Pay in full and pay on time. When you pay the full amount on time, you avoid costly financing charges and late fees. Before you swipe that card, remember that you are essentially borrowing from yourself as long as you are able to pay the entire amount off on time. If you can’t pay it all right away, at least make sure you are paying more than the minimum. What you don’t pay now can quickly snowball out of control!
•  Protect yourself. A credit card can offer you better protection against theft than a debit card, and is easier to replace than cash. Scan every month’s statement to look for any unauthorized purchases and report them right away. By law, if your card is lost or stolen you are no longer responsible for unauthorized purchases once you have reported it. Under federal law, your maximum liability is $50.
• Build your credit. If you are smart about how you use your credit card, it can actually help you! Using your credit card wisely can improve your credit score. It’s one of the ways you can establish a credit history and prove that you are capable of paying your bills on time. What’s not to love about that?

Something else worth knowing: having your credit card through through Fort Worth Community Credit Union can save you money and headaches. Really! Studies conducted by Pew Charitable Trusts (2009) and Consumer Reports (2007) found that credit unions offer cards with low annual percentage rates, more consumer-friendly terms, and fewer hassles. Because relationships with credit unions are more personal, you’ll get honest advice to help you with your credit, and you’re more likely to be given a second chance if you need one.

The moral of this love story? Treat your credit card right and it will return the favor. And get your worth on by switching your card to a credit union – your credit and your credit card will start to love you back.