The decision to use credit cards is one that should be undertaken wisely. There can be certain advantages (such as gaining a short-term financing window, not having to carry large amounts of cash around, and fraud protection services) and clear disadvantages (such as high interest rates, credit score changes, and excuses to spend more). Regardless of how you choose to use credit cards, it is important to be aware of some details.
- Fees may be charged on foreign country transactions. If you plan to travel abroad, then check with your company to see if foreign charges are made. Some companies will charge in local currency and then convert. Some charge a fee for using US dollars abroad, and others may charge a flat rate for every transaction, regardless of using domestic or foreign currency. Certain cards do not have these fees, so make sure that you know the rules on your card before spending overseas.
- You do not have to carry a balance. Many consumers believe that carrying a small balance on their credit card month-to-month is good for their credit. But this is a damaging myth: lenders and banks don’t see this as a sign of active use or creditworthiness, and carrying a balance doesn’t help your credit score. You can show active credit use instead by making a small purchase each month, like a tank of gas or groceries, and paying it in full by the end of the month.
- Your rewards can expire. Some added features of credit cards, such as frequent flyer miles and points, may expire if not used by a certain date. Cash-back rewards may allow you to pay part of your bill, but you have to make sure to use the rewards in time. Stay on top of the redemptions to make sure that you are not leaving money behind.
- You may be able to negotiate some terms. Here are a few examples of what consumers may be able to negotiate: you can ask to have an annual fee removed, lower your card’s interest rate, remove a late fee, change your payment date, and raise your credit limit.
Did you know? Credit card companies are often willing to compromise if you pay on time and manage your credit card wisely. If you want to negotiate the terms of your credit card or contest a fee, then simply call up your credit card company and politely request it.