By Betty Berry, Tuesday, June 7, 2011

Q: I’m really concerned about a very good friend who seems to think that credit cards are a “gift from heaven.” She has run up extremely high balances and is now having trouble paying her bills. I would like to talk with her about the problem, but don’t know what to suggest. Can you shed any light on what I can tell her?

A: You have brought up a very serious problem that is being experienced by many individuals, including a growing number of seniors. I am sure most of us know of someone who uses their credit cards to the extreme without realizing the consequences.

Having a credit card can certainly be a convenience and, in the case of an emergency, a blessing. But having a card can also be a trap resulting in overspending.

If we use a credit card, we have a responsibility to ourselves to use it with restraint and to the credit card company to have the ability to pay the bill.

Remember that using a credit card is nothing more than obtaining a short-term loan. So before zipping out your card for a purchase, ask yourself, “Would I really take out a loan to make this purchase?”

Keep your purchases within your income limits so that you can pay your bill in full each month. If you don’t pay in full, you’ll find interest charges added to the balance, and those fees accumulate quickly, making it even more difficult to pay the account in full the next month. If payments are late or missed, additional monetary penalties will be applied.

By paying only the minimum amount stated on the bill, the remaining balance that already includes interest and penalties is subject to additional interest charges. By paying only the minimum balance required, it will take years, if ever, before the bill is paid off.

If you are finding it difficult to pay the entire balance each month, consider canceling your account or at least putting away the card until such time that you have your spending under control.

Restrict the number of cards you have and never apply for more credit than you can handle. Don’t be hooked into accepting cards because there is a free gift or discount on a purchase.

Don’t be tempted to get a new card because of a very low interest rate. Often, this is a “come-on” and after a month or two, that introductory rate is replaced by a much higher rate.

Understand the rules that apply to your card. Know the interest rate. Determine whether that rate applies to previous balances only or if it also is applied to current purchases. Be aware of when your payment is due and whether there is a grace period. Keep in mind that grace periods and payment dates can be changed.

Review any enclosures that accompany your bill, as they often contain important information about changes in the handling of your account.

If you have a card you are not currently using, make sure you are not charged an annual fee for nonuse. One company I know of charges an annual fee if the holder doesn’t use the card at least six times a year. If you have such an account, consider closing it.

Keep track of unpaid amounts and past-due notices. If you stop hearing from these creditors, it doesn’t mean the debt has been forgotten. It more likely it means the account was turned over to a collection agency and will be reflected on your credit report.

Having good credit is very important in today’s environment, and it is up to you to establish and maintain a good credit record. No one else is going to do it for you.


Today, 1:30-3 p.m.: Seminar, “Self-Assess Your Driving Ability,” Westlake Village Civic Center, 31200 E. Oak Crest Drive, Westlake Village.

June 17, 1:30-3 p.m.: Seminar, “Understanding Your Medicare Coverage,” Goebel Senior Adult Center, 1385 E. Janss Road, Thousand Oaks. For reservations call 381-2744.

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