Successful Strategies for Managing Your Credit
Managing your credit cards
is crucial, and by management, we do not mean simply spending within limits and
paying off balances. Managing your credit also means understanding the
agreements you are entering into with credit cards companies, how those
agreements can change and what that will mean for you. Managing your credit
also means understand how to evaluate credit card company offers and how to
shop for the best deals, as well as the impact of your borrowing and repayment
history on your credit report.
Research, Read, Compare
One of the most basics questions to research is how much interest you are paying, and what kinds of events can occur that will allow the credit card company to alter those rates. The best credit cards will offer low rates over indefinite periods. But many start with “teaser” rates. An offer of low or zero initial interest rates might sound appealing (and in fact, for your purposes is appealing) it is important that you understand the terms of those rates. Introductory rates are can be contingent on a short time frame, and/or a spotless, on-time payment. Failure to make a payment, or borrow over the limit, in some cases, can result in an immediate increase in the rates as well as a charge for the difference between the old and new rates, retroactive to when the initial rate took effect.
It is also important to
understand that credit card agreements are different than some other types of
lending agreements in the sense that there is typically not same level of
contractual rigor associated with taking out a credit card as there is, for
example, with a car or mortgage. With autos and homes, all the terms of the
loan – interest rates, late payment penalties, etc – are signed-off on by the borrower
before the loan is made. With credit cards, a borrower typically fills out an
application that includes little or no information about the terms, and leaves
open the lenders ability to change those terms in the future. Terms can be
changed with only 30-60 days notice. This flexibility on behalf of the lender
means that it can raise rates, lower borrowing limits and/or call-in the
balance of the loan with little notice provided to the borrower. 
Therefore, it is important to always read all materials you receive from your credit card company so that you are aware of any changes in the terms that might occur. Even a responsible borrower, who pays the balance or at least monthly minimum, can find that they do not fully understand their credit card agreements, resulting in their incurring higher than expected interest rates.
Some credit card companies will, after the introductory period, raise the ongoing rate to a level much higher than what is the competitive norm within the industry, so you could end up paying much more in interest over the long term. Credit cards typically carry rates anywhere from 5 percent to 35%, and are usually based upon the credit history of the borrower. It is important to shop for the best rate possible, as different credit card companies set different rates for the various types of credit history, and the cost savings between them can be significant.