How to steer clear of credit card ‘pitfalls'

ALLAMUCHY — As president and CEO of one of the nation’s largest credit reporting companies, Nancy Fedich of CIS Inc., sees firsthand the negative impacts credit cards can have on an individual’s credit score if not managed properly. Fedich, vice president of the National Credit Reporting Association’s Board of Directors, says individuals should take precautions in managing their credit cards to ensure they maintain a healthy credit rating, which in turn will lead them to better interest rates loans. “Credit cards affect your credit rating heavily,” she said. “The credit bureaus look at how many you have, if you are maxed out, and if you pay on time.” Fedich notes three credit card ‘pitfalls’ that should be avoided: opening too many credit card accounts; reaching the maximum allowable amount for these accounts; and paying the minimum amount every month. For those who have begun to fall into these, and a record number of Americans have, Fedich says there are several approaches you can take. “Make sure you pay in full if you can or more than the minimum payment,” she said. “The minimum payment is usually less than interest and you never get ahead. “The other bad thing is that people often play games. They open one credit card with no interest or low interest for the first few months and then they transfer to another card. It ends up being a game.” Fedich says if you are unable to address credit card debt issues on your own, there is help available. “If it gets too overwhelming go to a credit counseling service - not credit repair - but a nonprofit group that will negotiate with your creditors on a payment plan.” Fedich notes important steps you can take upfront when considering applying for a credit card: “Be careful of the interest rates; sometimes they start low and get upped in 90 days. Also avoid opening too many accounts and check for ones with no or low yearly fees.” Fedich also cautions anyone who may be thinking about applying for store credit cards, which “rope you in with specials but their rates are typically very high.” Fedich believes the credit industry preys on those who are struggling with credit by placing high rates on the cards and offering gimmicks such as allowing you to transfer balances that can worsen your situation. Nationally, credit card debt has nearly tripled in the last two decades, according to a recent Newsweek online report. If you are financially capable, Fedich notes that the best policy is to do your best to pay now, or end up paying much more later: “It’s always better to pay as you go; bad credit stays in your credit report for seven years.” Allamuchy-based CIS can be reached by visiting www.cisinfo.net, e-mailing info@cisinfo.net or calling 800-275-7722.