Be Smart about Credit

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September 08, 2008 Becoming an adult is a wondrous event for most young people. In Arkansas, the age of 18 is considered adult status and that status brings with it many responsibilities. One of the things that can occur at age 18 is that consumers can apply for and receive credit. While the lure of credit can be hard to resist, young people should keep several things in mind before applying. First, credit is not free money and is instead a way to buy goods and services now and pay for them in the future. Every time consumers, use, or apply for credit, it can have an impact on their credit history and credit score, which are both used by creditors to determine a consumers ability to pay back a loan. When choosing a credit card, please keep the following tips in mind: - The Annual Percentage Rate (APR) is the amount you pay for borrowing money on an annual basis. Sometimes its called the *interest rate. When the rate is applied to your balance, you can see how much it costs every month to carry your balance. This figure is known as the finance charge. unless you know that you can pay off the full balance every month, shop for the card with the lowest interest rate. - Free giveaways are not a good enough reason to apply for credit; Some credit card companies charge an annual fee while others do not. However, a card with no annual fee may be accompanied by a higher APR; - A grace period is the time between when you buy something and when your payment is considered due. Not all credit cards have a grace period. This means interest will start accumulating at the time of purchase. Ask about the grace period and only select a card that gives you the opportunity to pay the balance in full each month without incurring interest charges; - Be aware of promotional or introductory interest rates. Many cards start out with low rates but eventually move up to higher rates. Make sure you know when the higher rate begins; and- Read the fine print (remember a credit card application is a contract); Credit cards are very valuable and often a target of would be identity thieves. Owning a credit card should be done so responsibly. If you own a credit card, please keep the following tips in mind: - Hold on to your receipts as if they were money as well as any other documents specifying the conditions of your purchases. This will help you resolve any disputes that may arise; - Never lend your card to anyone; - Never give your card number over the phone unless you initiated the phone call and you are dealing with a reputable company;- Sign your credit card with a pen as soon as you get it; - Do not sign blank receipts; - Write to the credit card company if there are any questionable charges on your statement; do this promptly after you receive your bill. You have only a limited time to dispute unauthorized or inaccurate charges; and- Always carefully review your bills to make sure there are no unauthorized charges. For more tips on credit cards, visit the Attorney Generals website ,, or contact the Public Protection Department of the Attorney General's Office at (501) 682-2341 or toll-free statewide (800) 482-8982.