We all know that you when you become an owner of credit card remember you are the one in charge NOT the credit card!

I have learned when more about credit cards when I worked for a secured credit card company whilst living in Portland, Oregon. The company’s target customers were those with bad credit card history and provided secured credit cards with identifiable credit logos which high risk customers can make charges into reestablishing their credit history and their payment history reported to the credit bureau.

A quick lesson in credit card 101: a secured credit card limit is the amount deposited by the applicant and owned by the issuing company’s distinct savings account. Now, if the customer is unable to pay for accrued bills the funds from the account is then used to pay debt.

An unsecured credit card does not need collateral like a secured card, the applicant’s employment history, credit history of making payments on time or ever missing a payment determines the credit limit. With an unsecured credit card, our responsibility of handling payments toward our bills is our collateral.

Credit charges accrue monthly and when making payments on your bill, you have two options: either you pay the minimum amount which means finance charges added to the sub balance you owe in addition to the new charges from the next month; or you can pay the full amount avoiding any finance charges.

Believe this or not, majority of the applicants who signed up for a credit card claimed they weren’t aware they had to pay finance charges. Most common comment heard was “I didn’t sign up for that” when actually they did when they accepted for the credit card.  The Terms and Conditions explain everything in the fine print, wear a pair of common sense magnifying glasses and seriously read before signing.

There’s a method of avoiding paying finance charges which you’ll probably think that’s not possible. One way is not make any charges. True, but actually, such a feat is quite possible and I haven’t paid finance charges for several years.

Listed are guiding principles I live by:

  1. Get a calendar book and gave myself a charging limit, about $100-200
  2. Record the amount of charges at the end of the week
  3. By the second week if I’ve spent over my charging limit, then I make half payment
  4. By third week, again if gone over my charging limit, make another payment
  5. At the end of the month, my unpaid charged amount has already been reduced
  6. Pay more than the minimum amount, I calculate the unpaid charges and the new charges and pay that amount

Keep in mind you are in charge of your credit card, not the other way around. A credit card is only plastic, it can’t think on its own.