Credit Card Fees and Usage

Sure, you're familiar those magic plastic cards. You whip them out to pay for diapers, toys, groceries and more. You get the statements every month. But how well do you really know your credit cards?

Credit card companies are in trouble. Since more and more people are defaulting on their debts, they're making everyone pay for it by changing their terms, making carrying debt more costly. (Many of my best friends didn't even know that until I told them! Did you?) The more you know about our credit cards, the more control you'll have over your debt. Here's what you need to know:

• How many cards do you have? You should only have two credit cards in your wallet at any given time. These two cards should be the cards you have with the best terms—lowest fees, largest limits and maybe even points! Also, make sure if one's a Visa, the other's another issuer like American Express, MasterCard or Discover because some vendors don't take one card or another.
  
  
• What are your interest rates and fees? If you don't pay your credit card balance in full each month, you'll want to pay extra attention to the APR, which stands for annual percentage rate, and finance charges on your credit card statement each month. Both of these reveal how much interest you're paying on any balances. The lower, the better.
  
  
• Do you pay your credit card bill at least five days before it's due? If not, you should. Until a new regulation comes into place next year, credit card due dates can be due at specific TIMES! So if your bill is due the 15th, it may be due the 15th at 8:00 AM! Miss your due date by one minute and you can have your rates on any and all cards raised to 29 or even 39 percent, not to mention late fees and lowered credit limits.
  
  Tip: If it helps you to be organized, make a little spreadsheet with all this information and watch out in the mail for any notices of changes to your terms and update your sheet over time to help you manage your credit right.
  
  
• Are you paying off the right card? The best (and fastest) way to pay off credit cards is to throw the most money at your balance with the highest interest rate while you pay the minimum on all your other cards.

Know the skinny on all your credit cards, including balances, interest rates and due dates. If you get a handle on them now, your debt is less likely to spiral out of control.

Get more financial advice from our personal finance expert, Carmen Wong Ulrich!