Guides:

How to Shop Till You Drop:
Opening a Credit Account

by Gabby Brown, Emory University Graduate

Whether you have an emergency or just want to buy something a little out of your price range, sometimes cash and checks just aren’t enough. In situations like this, it’s good to have a credit card.

What is Credit?
A credit card is a plastic card that allows you to buy things and pay for them later—essentially a system of borrowing money. Some of the major credit card providers are American Express, Visa, MasterCard, and Discover. If you don’t pay your full bill on time, you are charged interest. Interest is the fee you’re charged for borrowing money. It is extremely important that you pay your bills on time because interest piles up fast and can leave you heavily in debt. Different credit card companies charge different interest rates and other fees, so it’s important to shop around before you choose a credit card. There are a number of things you should look for when you’re choosing a credit card.

What to Look for in a Credit Card 
First, look for the lowest APR and annual fee. APR stands for Annual Percentage Rate. This is a way to measure how much it costs to have a credit card. It represents how much interest you’re charged on the money you borrow by using your card. An annual fee is another way to tell how much it costs to have your credit card. It’s different from interest and it just means the rate that they charge you every year to use the credit card. The best credit cards to look for are the ones that cost you 0% APR financing and with no annual fee. Some cards may even have cashback bonuses where you receive a certain percentage of money back from your purchases.

The cost calculation method is the way companies figure out how much interest you owe. The two most common methods are Average Daily Balance, Excluding New Purchases and Average Daily Balance, Including New Purchases. The Average Daily Balance method means that the bank adds up charges and payments for each day, then adds it up to determine the monthly interest rate. Charges you make during the month can either be included in that month or the next month (Including or Excluding New Purchases). Most credit card companies use the Average Daily Balance, Including New Purchases method. 

You should also find out about the minimum payment. This is the smallest amount of money you can pay each month. It can either be a dollar amount or a percent of your bill. A small minimum payment can be a good thing because it gives you more time to pay off your bill. However, this makes it easier to spend more money than you should and this can be dangerous. Keep in mind that if you wait longer to pay off your full bill, you pay more interest. It’s tempting to just pay the minimum every month, but every time you do this, you fall further into debt. Try to make bigger monthly payments so you pay off your debt faster. That way you’ll save money. 

When you apply for a credit card, you apply for a certain credit limit. The credit limit is the maximum amount of money the credit card company will let you borrow on a card at one time. It’s good to have a higher limit because it lets you be more flexible with what you spend.

What credit limit you can get depends on your credit history. This basically means how responsible you’ve been with your money. This can be measured by how often you pay your bills on time and how well you manage debt. If you tend to pay your bills late or if you already owe a lot of money, you probably won’t have a very good credit rating, so the credit card company won’t give you a very high spending limit. Your credit limit shows stability. Having the same job or the same house for a long time will improve your credit rating. 

The Dangers of Debt 
When you have a credit card, it can be tempting to spend lots of money because you don’t have to pay for everything right away. However, it’s important to be careful with your spending. Spending too much and not paying your bills on time damages your credit history. This can be a problem, but there are even worse consequences that come with not paying bills on time. Many people pay the minimum payment or don’t pay their bills at all for so long that they end up deep in debt. Owing a credit card company more money than you have can be a very stressful situation. It can also make it hard for you to get a job or an apartment because many employers and landlords check your credit history.  It is very important to pay your full bill whenever you can to avoid this sticky situation.

However, if you’re already in debt, there are agencies that can help. These agencies negotiate with the credit card companies. They can usually help lower your monthly payments and lower the amount of money you owe.  Here are the links to just a few of these agencies: Superior Debt Relief, Freedom Debt Relief, Care One Credit Counseling.

WARNING: Beware of moneylenders that promise you lending regardless of bad credit. Many people who are in debt are drawn to these companies because they will lend you money regardless of your credit history. But be careful! They often charge high interest rates and often ask that you hand over the title to your car or even house as collateral. Then if you are not able to pay them back, they will seize your car, home, or any other possessions that you have entitled them to.

Check out these sites for more information.
http://www.ftc.gov/index.shtml
http://www.banksite.com/index1.html

News and Events

H1N1 Information

Sagal Opens New Studio

HEARMe Youth Radio Interns Arrive

The Fugees: Clarkston's youth soccer team featured in Sports Illustrated