1. Shop around before signing up for a card. Deceptive terms and
conditions abound throughout the industry. Look for:
• An APR of 15% or lower;
• No annual fees; and
• Full information on teaser rates (make sure that you don’t agree
to a low rate that will rocket
above 15-20% when the teaser expires).2. Use credit cards
sparingly. Ideally, if you can’t pay off the balance each month, you
shouldn’t use your cards for day-to-day purchases. Companies try to
lure you with “rewards programs” and incentives so you will use your
credit card to pay for everything from pizza to rent to gasoline.
The debt you’ll incur outpaces any additional value of what you gain
in rewards. A 1% reward doesn’t reduce a 25% APR! So pay for
day-to-day and cost-of-living expenses in cash as much as possible.
Use the credit card only for the big ticket necessities you need.
3. Pay off balances in full each month. Companies keep the
minimum monthly payment low so that you’ll extend your payment over
time and rack up additional debt in interest. If you can’t pay off
the card in full, then make the largest payment possible each month.
Try to always pay more than the minimum required.'
4. Make your payments as early as possible every month (at least
7-10 days before it is due) to avoid late charges. Companies
routinely charge late fees of $30 or more. Worse, when you pay late,
nearly half of all companies also increase your interest rate to
25-30% APR or more on your total balance!
5. Call your credit card company and ask for a lower rate. It’s
cheaper for a credit card company to keep a customer than find a new
one, so if you think that your interest rate is too high, call the
number on your card and ask for a lower one. In a recent study by
the US Public Interest Research Group, more than half the consumers
who called lowered their rates by a third or more.
6. If you have a problem paying, seek help. Consider cutting up
(or locking up) your card and paying it off in a timely manner with
a personal loan from a family member. Consider talking to a credit
counseling service, but be careful: this once-respectable business
now includes numerous fly-by-night operations. Watch out for debt
settlement companies that require an upfront payment that goes only
to the debt settlement company (not to paying down your debts). To
find a legitimate credit counselor in your area, consult the
National Foundation for Credit Counseling at www.nfcc.org or
1-800-388-2227.
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Also, make sure that the company and the counselor are licensed in
Illinois. To check whether a credit counselor is licensed, visit the
Web site of the Illinois Department of Financial and Professional
Regulation
Do You Think You Have Been Unfairly Treated?
If you believe you are the victim of unfair interest rate charges,
late fees or other penalties, or deceptive marketing, and your
credit card company fails to address your concerns, you should file
a complaint with the Office of the Illinois Attorney General.
Although we do not regulate the credit card industry, we are
sometimes able to resolve disputes between credit cardholders and
their card companies.
In addition to filing a complaint with our office, you should
file a complaint with the federal Office of the Comptroller of the
Currency (OCC). The OCC regulates most of the big credit card
companies and will either handle your complaint itself or forward
your complaint to a different regulator if needed. Here’s how to
contact the OCC:
The Office of the Comptroller of the Currency
Web site: www.occ.treas.gov/customer.htm
email: Customer.Assistance@occ.treas.gov
Phone: 1-800-613-6743
Address: Customer Assistance Group
1301 McKinney Street, Suite 3710
Houston, TX 77010
For more information about credit cards or to file a complaint
against your credit card company, please visit
www.IllinoisAttorneyGeneral.gov or contact the Illinois Attorney
General’s Consumer Fraud Bureau at 1-800-243-0618 (TTY:
1-877-844-5461).
[Office of Lisa Madigan, Illinois Attorney General]
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