Here are a few points to ponder to optimize credit card purchases and avoid fees:
GET SMART: Don't buy anything you can't pay for -- it's the basic principle for staying out of trouble with credit cards, said Josh Frank, a senior researcher at the Center for Responsible Lending.
15-20 PERCENT: Keep your credit card balance at 20 percent or lower of your net salary -- ideally 15 percent, said Simon Medcalfe, an assistant professor of finance in Augusta State University's Hull College of Business.
STAY LOW: As a general rule, use the card with the lowest interest rate, Mr. Frank said.
INTEREST-FREE OFFERS: If you're a good saver, you could benefit from the offers of no interest until a later date. "You need the financial discipline," Dr. Medcalfe said. If you don't pay on time, interest can be tagged on going back to the purchase date, he said.
INACTIVITY FEES: Some card providers charge a fee if you don't use their card periodically. You can use these cards for holiday purchases to avoid the fees, Mr. Frank said. Just pay them off in the grace period to avoid an interest fee.
PENALTY RATES: Make all payments on time. A missed or late payment can result in a higher penalty rate, Mr. Frank said.
Quick change: Credit lines can be decreased or even closed without notice, so check online or contact the provider before making a big purchase.
NO CASH ADVANCES: Avoid taking out a cash advance, as the fees on that service have increased, Mr. Frank said. International fees have also increased, so be aware of those if buying an item from an international vendor.
LAYAWAY: This is a good option if you're not the best saver, Dr. Medcalfe said. It's not an option at all stores, but the general rule is you pay a certain percentage of the cost as a down payment and pay incrementally until you've paid off the item.
Reach Sarah Day Owen at (706) 823-3223 or sarah.owen@augustachronicle.com
Go shopping with Steven Uhles on Friday at augustachronicle.com/blogs.
The Augusta Chronicle ©2012. All Rights Reserved.
