It Takes Credit To Build Credit

Using a credit card wisely is an important step in building a good credit rating. If you're trying to re-build your credit or if you're young and just starting out, pay close attention the next time you receive a new card offer in the mail. When you're trying to build a positive credit history for yourself, using the right credit card makes sense. Making small purchases and then making your payments on time each month is a simple, reliable way to build an outstanding credit report.

What to Look For On a Credit Card Application

If you receive a credit card application that appears to offer a low monthly interest rate, don't make a decision until you turn it over and closely examine the Disclosure Box. In it you'll find a more important measure of credit terms - the Annual Percentage Rate, or APR. By federal law, the Disclosure Box will also tell you whether or not the card has what is called a grace period - a number of days, usually 25, until your purchase starts to accrue finance charges. If a card has a reasonable grace period and you pay off your balance at the end of each billing cycle, you won't have to pay finance charges. It isn't difficult to find credit cards that offer these grace periods, so if the Disclosure Box doesn't declare one then throw the application in the trash and look for a better offer.

If you don't have any credit history at all, a credit card company won't want to give you a very high credit limit, but that's probably best when you're just starting out. You don't want to be tempted to go into serious debt with your very first credit card.

Calculate Your Monthly Finance Charges

Ideally you want to pay off your balance each month to avoid paying any finance charges, but when that isn't possible it's important to know the actual cost of the items you purchase. The annual percentage rate, divided by 12 months, gives you the periodic rate that will be applied to your outstanding balance each month. You can estimate what your monthly finance charge will be by multiplying the periodic rate times the outstanding balance. It may sound complicated at first, but taking the time to learn this simple equation can make a big difference in how you use your credit card.

When you're able to see how much you actually spend on an item that you don't pay off at the end of the month, it might help you to resist the temptation to over-use your card. An item that you want to buy might be on sale at the time you purchase it, but if you don't pay off your balance at the end of the month then those finance charges can dramatically increase the actual amount you'll end up paying.

Use Your Credit Card as a Tool

Credit cards are only one of the tools available to help you build a positive credit history. Making on-time payments for other forms of credit, such as rent and utilities, are also important. Depending on your situation, within 1-2 years your credit rating will be improved enough that you no longer need to use your card for new purchases to maintain your good credit. Use these tools wisely, and they'll help build your financial future!

Preventing Credit Card Fraud - 12 Top Tips

Many people enjoy the convenience of paying for goods and services with a credit card. Unfortunately, some people become victims of the growing problem of credit card fraud. The first you may know of fraudulent activity on your credit card account is seeing unauthorized transactions on your statement.

Here are 12 simple steps to minimize the possibility of fraud on your credit card account:

1. Keep both your personal and credit card information secure. Never email your credit card details. Email is not a secure method of transmitting data and can be intercepted by criminals.

2. When you receive a new credit card always sign it immediately.

3. When you receive a replacement credit card always destroy the old card immediately. Cut the old card into at least three pieces.

4. Make sure you thoroughly destroy old receipts that have your card details printed on them. The most effective method is to use a shredder.

5. Open and read your credit card statement as soon as you receive it. Check to make sure you know what all the payments printed on the statement were for.

6. If you see transactions on your credit card statement that you do not recognize, immediately contact your bank or credit card company.

7. If you cannot find your credit card for any reason, immediately telephone the card issuing company and tell them. They will block the card to prevent any unauthorized use.

8. Never tell anyone your Personal Identification Number, which allows cash withdrawals using your credit card.

9. Make sure your Personal Identification Number is not easy to guess. Avoid using numbers that are easy to trace, for example do not use your date of birth. Ensure you use a different Personal Identification Number for each individual credit card.

10. Do not use an ATM if you suspect it has been tampered with. Report your suspicion to the bank that operates the ATM.

11. When you use your credit card in a retail store always keep a watch on your card while the clerk processes the payment. Double check it is your card that is handed back to you.

12. If you use your credit card to make online purchases, always ensure the web page where you enter your credit card details is secure. A secure web page has a URL that begins https:// and an image of a locked padlock in the bottom right hand corner of the browser window.

Following these simple precautions will reduce the possibility of you becoming a victim of credit card fraud. Your bank or credit card company may have further information on minimizing the risk of credit card fraud, so it is worth contacting them.