Understanding Credit Cards

Starting Out: Understanding Credit Card Mechanics

By Sharon Secor

Direct Lending Solutions Staff Writer

Now that you have that credit card, you’ll need to make sure you know how to use it. Learning the mechanics of a credit card when you’re just starting out will help to ensure that you are able to avoid making the credit mistakes that all too many do in the beginning.

Interest Rates

Naturally, the most basic thing to understand about a credit card is the interest rate. Unless it is an essential purchase, something you simply can’t do without, like an automotive repair when public transportation is out of the question, you shouldn’t buy something that you will have to carry a balance on. Once you start to carry a balance, you’ll be paying above and beyond the purchase price in interest rates. It is a better economic choice to save for what you want.

Monitor Statements

Part of keeping your credit healthy is making sure to go over your monthly statements carefully to make sure that there are no mistakes on the charges, that all purchases are yours. You should also check your overall credit report periodically. There are several legitimate online sources from which you are able to get a copy of your credit report. If you do discover an error or a charge that is not yours, you will have to dispute it.

Correct Statement Errors

If there is an error on your credit card statment, you’ll need to contact your credit card company. Usually, the number is right on the back of the card. Have all documentation you have available, paper and a pen when you sit down to make the call. Make a note of the name of the person you speak with and be polite. Your credit card company may request that you complete the process in writing, and some will send specific forms for this purpose. They are obligated to respond to you within 30 days concerning the matter.

Disputing information on your Credit Report

If you are disputing an entry on your credit report, you will be discussing the matter with the specific credit reporting agency. The first step is to call the agency, again prepared with, if you have it, documentation, as well as paper and pen, and explain the situation. According to the Fair Credit Reporting Act, the credit reporting agency is obligated to respond to your disputing of the information by investigating the matter, unless it is deemed frivolous, and if it the disputed item cannot be proven by the credit reporting agency, it must be removed. If information is incorrect, the credit reporting agency has to remove it from your credit report.

Lost or Stolen Cards

In the unfortunate event that your credit card is lost or stolen, or you think that your number has been used illegitimately, it is essential that you contact your credit card company immediately so that they can cancel the card. That way, you won’t bear the charges that may be placed by whoever improperly used your credit card.

Most credit card companies are fairly reasonable, as long as you make the attempt to communicate with them when there is a problem. This even applies if you are going to be late with a payment. Sometimes things happen – job loss, injury, illness. Keeping in contact with your credit card company is much better than ignoring the situation.

Keep your credit report strong right from the start, by understanding how your credit card works and using good management skills, will serve your well, not only today, but also in the future. Checking your credit report and acting on errors quickly is an important part of maintaining your credit card and rating, and will help to ensure that you are not adversely affected by something that shouldn’t have been there in the first place. When you strive to protect your credit today, you increase the odds of attaining that loan or mortgage you may want in the future.

Related Pages in Our Site: Establish Credit Early | Minor Credit Infractions

Useful External Resources:

http://www.capitalone.com/credit101/credit/