Smart Military Money
Personal finance tips andadvice for the military lifestyle.
Access our library of free homebuying ebooks and PDF guides.
Younger consumers often receive credit card offers in the mail.
The appeal of charging wish-list goodies to a credit card allures shoppers in their late teens and early 20s. Young military families, especially those in financial trouble, need to look out for predatory offers.
During the third quarter of 2011 credit card companies issued 25 percent of new cards to customers with credit scores below 700, according to TransUnion. That’s up from 23 percent during the same quarter in 2010.
With companies targeting consumers with lower scores, it’s smart to arm yourself with knowledge. Below are some red flags that appear in credit card offers that arrive in your mailbox:
Introductory APR is usually low to attract customers. However, it will expire per the fine print and increase.
Again, that APR may look good, but check the asterisk(s) next to it. If it’s a variable rate that means the issuer can adjust the rate according to the national interest rate, but the issuer does not need to warn you. Fixed rates can still change too as long as the issuer gives you 15 days notice of the change.
Credit card companies might charge an interest rate on balances that roll over from one billing period to the next and another on new purchases.
There’s no end to how companies name their fees: activation fee, maintenance fee, annual fee and much more. The obvious downside is that fees shrink your credit limit. A $500 limit with $100 in fees is really a $400 limit.
Be on the lookout for credit cards that start charging interest as soon as you make a purchase. Ideally, you’d have a grace period, giving you time to pay off your balance before interest starts to accrue. But balances that roll over each pay period will be charged interest.
Think about how you want to use the card. If you don’t plan to pay your bill in full, you should get a card with a permanently low interest rate. For consumers who can pay the bill immediately, it’s best to get a grace period and no annual fee.
Regardless of what you decide, look for the red flags before you sign any agreements.
Thanks to Charles Williams for the photo under a Creative Commons license on Flickr.
5 Comments
Best idea is to have no credit card. If you don’t have the money don’t buy it! Debit cards can be used anywhere a credit card is & if you have money in the bank when you go to finance a house or car, it looks better than having a late credit card payment 3 years ago. Also, any defaulted credit cards can and will be used against you in the event you wish to apply for a High Clearance, so…. buyer beware!
If you are young, having a credit card can be a good thing. It’s part of building a good credit history and credit score, and establishing a good credit history allows you to acquire auto and home loans with less hassle (as well as at lower rate).
For military members I would recommend establishing a relationship with USAA.
Technically Credit Cards are to be used only for emergency reasons, once you have enough money in your bank account, please go a head and pay it off! you don’t make more than 5% interest on your saving which have $100.00 in it while you are paying over 10% interest on your $500.00 debt! use your brain! if you pay it today you can use it tomorrow and you are saving all the interests and fees they will charge you.
Where in hell can you get 5% interest on savings?? I’d like to find it!!
i called my credit card company and requested they drop my annual fee- they did because i have raised my limit from 300 to 1100 $ because of consistent good payment history- you have to call , they want to keep your business