Wednesday, June 13, 2007

Read the terms, read the terms, read the terms!

Are you tripped up by your credit card terms? Do you have a love hate relationship with your cards? Are you plagued by the consequences of your card use?

Do you even know how much debt you have? According to this study, you probably don't. The average household has over $9k in credit card debt (not including the mortgage, car loans, and student loans). 7 out of 10 people felt they had less credit card debt than average, not surprising since they don't know just how much debt they actually have.

9 in 10 did not know how long it would take to repay a credit card with the minimum balance. They are misinformed about how their credit score is calculated.

The majority of respondents believe that it would be financially prudent to have no debt, close credit card accounts, and have unused credit cards. In reality, all three actions can hurt, not help, personal credit ratings.

Ha! If I have to choose between having a low credit score and paying interest on debt, I'll choose the low score. Having no debt doesn't damage your score, having no credit history does. You can still use credit cards, monthly, without being charged interest and still maintain a good credit score.

80% say you should check your score. Well, your score is just a calculation based on your report, and it's not free! You can get a free report from and THAT is the report you need. The score tells you very little. Keeping track of your report and getting a copy every single year is what is important. Keep your report looking slick and your score will take care of itself.

three-quarters of Americans don't bother to read cardholder agreements.

Why? Admittedly, most of it doesn't really apply. My recent card sent me a booklet with a bunch of information, but half of it were things that didn't apply to me. Travel protection, default terms, etc. I read it all and stored it away should I ever need to review it again. It took me 5 minutes.

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