Credit Cards Online Information

A little self-discipline with your credit cards can put hundreds, if not thousands of dollars, in your pocket. But a lack of discipline can cost you dearly.

Georgina and I made our discipline pay off last month when we split a major purchase of furniture for our new home among three credit cards. We stayed within each card's credit limit and took full advantage of their rewards program.

As a result, we will be getting $100 in free gasoline, a $150 credit on our telephone bill and a $41 cash rebate to use any way we want -- all for buying the furniture we planned to get anyway.

By using the cards, we also delayed parting with our money for up to five weeks. After taxes, we will make an extra $100 in interest before the credit card bills arrive. When they do, we will pay them in full, of course.

Over the years, we figure we've made or saved more than $5,000 by using credit cards this way -- exclusively for convenience, for perks and to squeeze a little more interest from our savings while we stay debt-free.

Unfortunately, that's not the way the average American handles credit. According to the Federal Reserve, the typical household owes one dollar for every $7 dollar of disposable income, which basically is the money we have left after taxes.

The good news is that thanks to the most recent interest rate cut by the Fed, a half percentage point on March 20, users of variable- rate credit cards can expect to save at least $1.2 billion in interest over the next year. That's the estimate from CardWeb.com, Inc., an offspring of RAM Research Group in Frederick, Md.

The bad news is that with the economy slowing, more Americans are having trouble paying their bills, including a staggering $664 billion in credit card debt. Overdue credit card payments are up, as are the number of mortgage and other consumer loan payments at least 30 days late. Some delinquency rates have reached levels not seen since the recession 10 years ago.

What's a consumer to do? If you're already in debt or lack the discipline to handle credit effectively, your course of action will be much different from what I would recommend otherwise.

For example, Elizabeth Jetton, a certified financial planner in Atlanta, suggests that you eliminate credit cards for everyday use. Studies have repeatedly shown that consumers spend more when they're paying with plastic than with cash.

Yet, disciplined consumers who use credit cards make money simply by getting the interest-free use of the amount of the purchase until the bills arrive. That's why Georgina and I use cards for everything, from groceries to gasoline.

Most certified financial planners also recommend you try to pay off as quickly as possible any loans -- and loans include credit card balances -- that charge an interest rate of 10% or more.

Pay as soon as the credit card bill arrives. When you have a balance, the longer you delay paying, the more interest you owe.

Some cards -- the best example I've found is the Discover card -- help you manage your money online. Discover will send you an e-mail reminder if your payment has not been received within six to seven days of the due date, or if you're getting too close to your credit limit. You can arrange to have your bank account automatically debit each month for the full balance amount or the minimum payment due.

Once you get rid of credit card debt, you can follow these steps to make money with your card. These are the rules in the Cruz household:

-- We use credit cards only for the things we planned to buy anyway and that we know we can afford.

-- If we don't have the cash to pay for something, we also refuse to buy it with a credit card.

-- The minute we use a credit card, we subtract the charge from the balance of the account we will use to pay the card bill. The money, in effect, has been spent.

# posted by Medical Information : 4:23 AM