Don't Do Debt.com : Choosing a credit card

Choosing a credit card

A friend of mine chooses credit cards like this: An offer comes in the mail. She entertains the offer, turns it over and then reassures herself she can get a lower interest rate. Seriously. She doesn't consider the costs of using the credit card or the impact her current cards have on her financial situation, only whether she can get a lower interest rate. Sadly, she and her husband are on the haphazard strategy of paying bills. They pay when they have money and a convenient time to sit down and "do bills". NOT GOOD. They pay late fees every month on almost every account they currently have - from credit cards to health insurance and other loans- they don't need more accounts.

When it comes to your money and paying bills, organization is a must and timeliness is godliness in terms of protecting your credit and saving money. Late payments erode your credit history and worse, are very expensive, especially when late on multiple accounts. Think of this: A meager $20 late payment on 7 accounts a month. That's $140/month. Pay late on all accounts for a year, they are looking at $1680 in late payments alone. They, however, see the late fee on each account and it seems insignificant. They don't necessarily do the math in the big picture- to their own detriment.

When choosing a credit card, don't simply consider the interest rate. Think about whether you can afford another credit card and the fees, penalties and interest you'll pay for the life of that account.

Posted by Susan Powell on November 15, 2003 at 02:12 PM | Permalink

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February 2004