Good Credit Practices

The type of credit students build today could be the key to getting a car, apartment or job they want in the future. By understanding how to manage credit, students can develop the type of credit that can help them get the things they need and maybe even some of the things they want.

Seven Tips for Maintaining Good Credit

  • Spend only what you can afford to pay back.
  • Pay bills on time. When using the mail, allow at least eight to ten days after mailing.
  • Pay at least the minimum amount due each month to avoid additional fees and maintain credit rating.
  • Stay within the credit limit to avoid additional fees.
  • Before a move (even for the summer), notify creditors, so they can send monthly statements to the new address. If they do not have the new address, the statements may not be received. Remember: Good credit is your responsibility.
  • Call creditors to work out a solution if it is difficult to make the minimum payment required.
  • For protection, remember to sign the back of all credit cards.

Credit Terms to Know and Understand

  • Annual Fee: Some credit card providers charge a yearly fee for use of their card; others offer cards with no annual fee.
  • Annual Percentage Rate (APR): The APR is the yearly cost of interest charged to a credit card’s revolving balance.
  • Finance Charges: The total cost of credit, including interest, service fees, late fees, transaction fees and other charges.
  • Grace Period: A time period, usually 25 to 30 days, before interest begins to accumulate on a new purchase only when there is no balance being carried forward from any previous monthly statement.
  • Late Fee: To avoid late fees, credit card bills must be paid on time.
  • Minimum Payment: The lowest dollar amount due each month on an account’s outstanding balance. The lower your monthly payment, the longer it will take to pay off the balance, because interest will still accumulate on the unpaid balance.
  • When to pay: Wait until the credit card statement, or bill, arrives before sending a payment. Sending the payment with a portion of the statement assures that the payment is credited to the correct account. Always write the account number on the check and allow for sufficient mailing time.

Some Things Are Best Kept Private
Unfortunately, fraud is a booming business. Once someone knows a credit card number and expiration date, that knowledge is as good as cash. To avoid becoming a victim of credit card fraud, do the following:

  • Save all charge receipts and check them against the monthly statement.
  • If there’s a unknown charge, call the credit card issuer.
  • Think carefully before lending a credit card to anyone. The person whose name is on the credit card is responsible for paying all charges.
  • Memorize a PIN and do not carry it in a wallet.
  • Merchants can ask for a signature only as terms for accepting a credit card. There is no requirement to give out additional personal information when using a card for purchases. If a card is lost or stolen, call the credit card issuer immediately.

Adapted from Good Credit: Your Future Depends On It; 2004 Wachovia Corporation