Take control of your credit, debit cards

Mary Ann Van Osdell, Boutwell, Mary Virginia  |  1/4/2011 1:14:59 AM

News Release Distributed 04/07/10

The new Credit Card Accountability, Responsibility and Disclosure (Credit CARD) Act means consumers need to stay knowledgeable, according to LSU AgCenter family and consumer science agent Ginger Boutwell.

Increasing interest rates, changing certain fees or making other significant changes to the terms of your card will be communicated more clearly under the act, Boutwell said.

“Consumers still need to do their part to manage their credit cards,” she said. “Read your credit card agreement and understand the terms.”

Companies will send you advance notices about changes in fees, interest rates, billing and other features. By reading these "change in terms" notices, you can decide whether you want to change the way you use the card, Boutwell said.

Boutwell’s tips for getting the most from your credit card include:

– Pay on time, which avoids late fees and penalty interest rates.

– Avoid unnecessary fees. Credit card companies not only charge late payment and over-the-limit fees, but also fees for cash advances and transferring balances.

– If you can't pay your balance in full each month, try to pay as much of the total as you can.

It’s a good idea to get copies of your credit report and make sure information is correct, Boutwell said. Go to www.annualcreditreport.com, the only authorized online source for a free credit report. Under federal law, you can get a free report from each of the three national credit reporting companies every 12 months. You can also call toll-free 877-322-8228.

Your credit score is usually based on paying bills on time, outstanding debt, length of credit history and how many credit accounts you have. A mix of installment loans and credit cards may improve your score, Boutwell said. Too many finance company accounts or credit cards, however, might hurt your score.

Every time you use a credit card, you are actually borrowing money made available to you by a bank or other financial institution, Boutwell said. The institution pays the debt to the vendor, and, in turn, you pay the money back to the institution. By signing up for a credit card, you agree to pay back the money you borrowed, in addition to any interest drawn on the amount you borrowed.

Debit cards take funds directly from your bank account – in a sense acting like a check, just faster, Boutwell said. However, theft of your debit card can quickly devastate your bank account.

For debit card fraud, your liability is $50 if you notify the bank within two days of noticing the fraudulent charges. After two days, your liability increases to $500 and up to your entire account balance after 60 days.

Boutwell said one pitfall of debit transactions is not recording them.

Credit card companies, on the other hand, are held to strict liability laws. The law limits consumer liability for credit card fraud to $50, Boutwell said.

Credit cards also offer more consumer protection on some purchases made. For example, use credit cards for objects that will be delivered to your home after the purchase; this gives you added insurance in case the purchase is damaged en route.

One final advantage of credit cards is that they are a great tool for consumers who are seeking to establish or reestablish an attractive credit history. Responsible credit card use can improve one's credit rating.

If your credit card is lost, stolen or used without your authorization, you do not have to pay for any unauthorized charges greater than $50 under the Truth in Lending Act.

Call your credit card company as soon as you know you've lost your card or that your card number has been used without your authorization, Boutwell said.

– Keep a list of the customer service phone numbers for your cards in your files and carry it with you when you travel, so you have the numbers for all your cards in one place if your wallet or purse is lost or stolen.

– You can also check your monthly statement or your credit card company's Web sites for a customer service number.

Mary Ann Van Osdell
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