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Shah: How to use your credit cards responsibly
Navin Shah

Americans are good at using their credit cards, but not very good about paying off their credit card balances.  For example, according to "USA TODAY," the average Georgia resident has three credit cards with a total debt of $6,675.  

Here are some credit card tips to remember year-round, but especially with the holiday season coming when we are all tempted to over-use our credit cards.  

Pay Your Credit Card Bill On Time And In Full

Why:  Paying your bill even one day late means late charges – plus interest starts accruing on the unpaid balance immediately and daily.  The average credit card interest rate is currently 20%, so you are adding a lot to the cost of your original purchase.  And the longer you wait to make a payment, the more you will owe in interest plus the more your credit score will go down.

Sometimes a particular item is offered as part of a special promotion – such as no interest if the entire amount of the item is paid in full by a specific date.  Typically, these deals are offered on large purchases such as appliances, furniture, or electronics.  For example, a $1,200 purchase offered at no interest if paid within 12 months enables you to pay $100 a month for one year with no penalty.    

If you have such a special promotional purchase on your statement, it does not affect the remainder of your balance – be sure to pay off all regular purchases in full to avoid an interest charge.  

Pay More Than The Minimum

Why:  If you can’t pay your balance in full, pay as much as you can – and certainly more than the minimum required.  Paying only the minimum will meet your contract obligations with the credit card issuer and won’t reduce your credit score, but interest does keep being added to your pay-off balance.  It will take you much longer and cost you much more to pay the balance off in full.  

Buy Only What You Can Afford To Pay Off This Month

Why:  If you don’t expect to have the money to pay your balance in full, you are adding significantly to the cost of the items in fees and interest – as discussed in the two previous tips.  Instead, just don’t make the purchases.  

Remember to use your credit cards as part of your budget – not as an “above and beyond” addition to your budget.   

Compare Cards For The Best Terms And Rewards

Why:  Credit card issuers are competitive – they vary considerably in annual fees, interest rates, rewards, and various “hidden” fees.  

Usually, it’s desirable to avoid cards with annual fees and finding the lowest interest rate is easy.  However, you’ll have to search the fine print carefully so you can avoid or minimize such special charges as a processing fee; transaction fee; late payment fee; going over the credit limit fee; balance transfer fee; and overdraft protection fee..

Look for cards that offer perks that are important to you and rewards based on the amount of purchases you make – such as rebate dollars you can collect as cash or use as payments on card.  Other cards allow you to earn value toward travel purchases such as airline tickets or hotels.    

Check Your Statements And Your Credit Score

Why:  Your monthly statement can have errors, such as a duplicate charge or the wrong amount for a purchase you made.  

Also look for any purchases you did not make so you can report these amounts to your credit card issuer immediately.  Catching fraud quickly is essential to maintaining your credit in good standing as well as to minimizing the time and cost of dealing with stolen credit identity.  

It’s important to know your approximate credit score – while the precise number changes every month based on your various payments, you can check your score once a year free of charge with the three credit reporting agencies:  Equifax, Experian, and TransUnion.

Beware Of Special Offers

Why:  Credit card issuers regularly offer “special” promotions – such as the opportunity to skip a payment, to obtain a lower teaser rate, or to buy services like credit insurance or fraud protection.  These deals are typically better for the card company than for the consumer -- they can be expensive, with lots of fine print and few real benefits.          

Don’t Max Out Your Cards

Why:  Whatever credit limit you are approved for, try to use only about 30% of that amount -- because a big part of your credit score is based on how much of your credit you leave unused.  

Don’t Close Old Card Accounts

Why:  The age of your credit card accounts affects your credit score – the older the account, the more favorably it is considered.  Even if you pay off a credit card balance in full and do not intend to use the account again, keep it open – unless there is an annual fee.  Simply destroy the actual plastic card or lock it away in a safe place.

Think of your credit cards as short-term loans – every time you swipe your card, the issuer is giving you a loan.  Your statement is a list of all the loans that you made during the past month and that are now due.

Your goal should be to keep the term of every loan as short as possible – in other words pay it off as fast as you can.  That requires will power, self-discipline, and constant monitoring, but you will enjoy the results!     

Navin Shah is Chairman of Royal Hotel Investments, which owns and operates two hotels in Covington and one in Conyers.  He is also Vice Chairman of Embassy National Bank, a community bank in Lawrenceville that he helped establish in 2007 and has become one of the leading SBA “Preferred Lenders” in the southeast.  He can be reached by e-mail at