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October 12, 2011 | money-management

5 Things Every Credit Card Holder Should Know

Credit cards are just a fact of life. Being smart about how you use them makes your financial life easier, and will probably also help you sleep better at night! Here are a few facts to boost your credit I.Q.

  1. Think about your credit card as what it really is: a loan. Some people fall into the trap of viewing purchases made with their credit cards as “free money”, when the truth is far from it. Before you make a purchase with your credit card, ask yourself, “Would I take out a loan for this?” If the answer is no, you probably shouldn't be charging it.
  2. Set a goal of paying off your balance each month. Dividends on your existing balance and additional purchases adds up quickly. To calculate the true cost of buying something with a credit card, use a calculator like this one at It may quickly take the shine off that “must have” purchase.
  3. Keep your credit card number and the issuer's customer service number in a safe place at home. If your card is lost or stolen, you can then quickly notify the credit card company.
  4. Review your credit card statement each month and report any discrepancies immediately. Even the most careful person become a victim of fraud. Keeping a close eye on your statements helps catch fraud.
  5. Know your rights. If your credit card issuer offers “zero liability”, this means you're not liable for fraudulent charges if they're reported promptly. You may also have the right to dispute charges from merchants for products or services with which you are not satisfied.

There are advantages to using credit cards at times. You don't have to carry large amounts of cash, you can pay for necessary and unexpected expenses, and you may accumulate rewards. Understanding these five facts for smart credit use can help protect your credit score and your financial health.