Credit Cards 101

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A few important tips could help students and adults get their credit back on track.

Credit cards are an indisputable fact of life and if used wisely they can help with college expenses. If we understand how plastic works we can use credit to our advantage without being stung by some costly dangers.

"If you don't make the payment on time there's a late fee charge, interest rate increase and your balance escalates," says Heidi Berardi of Family Credit Counseling Service.

So number one, have a budget; know your monthly income and track your expenses. Are there places to scale back spending to help pay down the debt?

Second, know the payment due dates. Again, if we're just one day late, we're headed for the penalty box, hit with hefty late fees and a dreaded interest rate hike.

Third, "Always make above the minimum payment. The key to successful debt replacement is paying more than the minimum," says Berardi.

Fourth, keep a low limit. If you we make timely payments, the bank will automatically raise our credit limits and decline the increases. Avoid impulse shopping on your credit card and save your card for emergencies.

Lastly, "Know your rights. If you always pay your debts in a timely manner you can call your creditors and ask for a lower interest rate."

And don't forget that a good credit record is critical. You'll need a credit report for large purchases such as an apartment or car, and many employers now check credit reports when making employment decisions. Late or missed payments remain on your credit report for seven to 10 years.

"There are tools available to rebuild credit more quickly now, and I believe bankruptcy should always be a last resort," says Berardi.

If you're way over your head in debt and can't seem to work your way out, contact an agency like Family Credit Counseling Service in Rockford. They can help you create a budget and consolidate some of those high interest credit cards.