Credit cards and credit card companies aren't the enemy. If you are military, good debt can be a powerful way to leverage your finances and gain access to low-interest military loans.
Before they were famous, many truly influential men and women started by serving their country in the US military or grew up in military families.

Cracking the Credit Card Code

Credit cards and credit card companies aren't the enemy. If you are military, good debt can be a powerful way to leverage your finances and gain access to low-interest military loans.

But don't get too eager to accept that next offer in the mail from a credit card company, promising that you are "pre-approved!"

Once you open the envelope to find pages and pages of fine print, deciphering the language of these enticing applications can be confusing and frustrating. Here are some credit card phrases decoded, so you'll be able to figure out if these applications are right for you.

"Congratulations! You're pre-approved to apply!"

This means you've been pre-approved for the right to ask for the card, not to actually get the credit card!

"19% interest" isn't the whole story.

There may be a wonderfully low introductory interest rate on your purchases for a limited time - but watch out, this isn't the only interest rate.

The credit card could have a few different interest rates- one for cash advances, one for purchases, and another for balance transfers. Read the fine print carefully because these interest rates probably vary, and it's your responsibility to find these in the terms-and-conditions section.

Sometimes the low introductory interest rate depends on your making timely monthly payments; a 0% interest rate offers may jump up to as much as 30% with a single late payment.

"We have the right to change the rates, fees, and terms at any time, for any reason."

If something unsavory shows up on your credit report - such as failure to pay another creditor- interest rates on this card could change. This means that even if you've been timely with your payments on this card, you could get pinned with a higher, default rate for a transaction from another card.

Another reason for a sudden change in rates could be the result of a late payment - under which circumstances you can count on your rate to skyrocket overnight (see above).

"Don't worry about going over your credit limit."

Beware of this trap; credit card companies will slam you with over-the-limit fees, raised interest rates, and other charges if you exceed your credit limit.

Always stay within your credit limit - in fact, use no more than 40% of your credit limit, or it will negatively impact your credit score.

"We are pleased to offer you 0% fixed APR on purchased (until Jan. 2010)."

This 0% APR rate applies to your purchases, not your balance transfer - but it only applies within the time limit of the offer (in this case, until January 2010) and as long as you continue to make on-time payments of at least the monthly minimum. This is a program that requires money management on your part- credit card companies hope to make money on this offer, because too many people lose track of their spending and exceed the 0% expiration date. If your balance isn't paid in full before the offer expires, or the interest rate shoots up - to what could be 19% or more.

Although you may be a responsible consumer/spender, it is easy to miss a payment, and this too will cause your interest rate to rise.

0% fixed APR is a great tool, as long as you keep track of payment due dates. Write the expiration date on the back of your card so you won't forget!

"Low minimum payments."

Most credit card companies offer minimum monthly payment of 2%-4% of the balance.

This sounds low at first, but it accumulates quickly - the less you pay every month, the longer it will take to pay off the interest. Always pay more than the monthly minimum.

Manage your credit card debt well; keep track of your budget and payment due dates, ask questions, and educate yourself before you accept any credit card offer. And if your credit card debit is out of control, consider negotiating for forgiveness of some or all of your credit card debt and resolving to manage your credit card debt successfully, starting now.


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