Ten tips for credit card users

  1. Pay on time. Ask your credit card issuer if it offers automatic payment options or email alerts to remind you when a payment is due.
  2. Read your cardholder agreement — all of it. The agreement spells out fees and finance charges, so make sure you understand the terms. If you have questions, don’t hesitate to ask your card issuer’s customer service agent.
  3. Learn the facts about finance charges. If you don’t pay the entire amount due within the grace period, you may be charged interest on the unpaid amount. Understanding how creditors calculate interest can help you to manage your costs. Make sure you know the Annual Percentage Rate (APR), Periodic Rate, and the method the creditor uses to calculate interest.
  4. Know your credit limit. Monitor your account so you know how much available credit you have. Stay well below your limit in case you need to make an emergency purchase.
  5. Create a budget and stick to it. Budgeting helps you keep control of your finances and resist spending sprees. If you plan ahead, you’ll know whether or not you can afford a particular purchase.
  6. Reduce your debt. Keep your credit card balance low and don’t take on more debt than you can handle. This may also help your credit score.
  7. Limit cash advances. These advances often incur higher fees and finance charges.
  8. Applying for a new account? Think first. When a potential lender requests your credit report, an “inquiry” registers on your report. A high number of inquiries can negatively affect your credit score, so only apply for a new account when you really need it.
  9. Prevent credit card fraud. Keep close tabs on the activity in your account. Many credit card companies allow you to check your account activity online at any time. Make sure that each transaction was made by you. If you notice suspicious activity, report it to your credit card issuer immediately.
  10. Review your credit report. At the Web site www.annualcreditreport.com, you can receive one free copy of your credit report once a year from each of the three largest credit bureaus in the United States.

For more information on Credit Card Regulations, please visit www.federalreserve.gov/consumerinfo/consumercredit.htm.