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The Good:

1. Can build credit needed to buy homes and cars.
2. Provides a convenience to cash.
3. More secure than cash.
4. Paper trail of spending habits.
5. Offer better consumer protection than using debit cards in the sense that funds are not taken out of your account in the case of theft.

How to Take the Good and make it Great:

Use cards that pay incentives such as American Express rewards program. Shop around and look at a few resources below to find good cards to apply for and more information. Look for no fees, low apr, or good reward programs.

http://www.creditcards.com/ – CompareMany Cards.

http://www.cardratings.com/ – AnotherSource to find and compare cards.

http://money.aol.com/top5/credit/best-credit-cards – Story on picking cards.

http://www.bankrate.com/brm/howdoi/howdoicc.asp– Tips from Bankrate.com

http://bettercreditscore.sitemighty.com/ – more cards and tips about credit.

The Bad:

1. No control on spending habits.
2. Limits set at more that one can usually afford.
3. Instant gratification which can cause overspending.
4. Interest.
5. Not tax deductible.

How to turn the Bad into Better:

Make sure to use discipline when shopping or using credit cards. Self control is the best consumer tool. If practiced, you can typically pay your entire balance, not fall victim to the practices of credit card companies, and pay less interest overall. With that said here are your tips:

1. Pay on time.
2. Keep only one card with you. More than one is tempting and typically not necessary.
3. Always plan to pay the balance off in full each month.
4. If you have balances, do take advantage of promotions between cards, but watch the fine print!
5. Check your statement each month.
6. Call the card companies and ask for a better rate, even if you have a good one already.
7. Avoid impulse buying. Wait a day or to on large purchases that you can not afford to pay off in one month to really see if it is worth using the credit card.

The Ugly:

1. Card issues can change the terms anytime they want.
2. Promotions and low interest rates are set up to ensure the consumer fails.
3. Late Fees.
4. Retro-active rate increases and default interest.
5. Adversely affects credit when cards are near limit.

How to change the Ugly into ok.

The ability for credit card to change terms and conditions is the most powerful tool they have to squeeze un-suspecting consumers. So, read all those notices you receive. They have to give you an option to not agree to the terms, which in most cases means your card will no longer be active and you have to pay the card off. With so many other card offers out there, this is you signal to change or apply for a new card.

Other tips:

· Pay a week before the due date. This way if they put
the due date on a Sunday you will be sure to avoid this common tactic to cause a late payment.

· Watch for payment due date changes. This happened to
me. It was the same each month for many years then they changed it on me and my payment was late. Goodbye promotional rate. My fault for not watching though.

· If late fees are assessed, call and ask them to refund.
If you have been a good customer you can typically get them refunded.

· If your promotional rate changes, be a pain in the ass.
That’s right, they had to send you notice as to why it changed, so make them prove it. Escalate to the next level manager if they give you the “it was sent to all our card members” excuse.

· Keep record of when your payments posted from your bank.
Sometimes they may blame you for a late payment when it was there fault in the accounting department.

· Lastly, if you feel you have been taken, do something about it.
There are many groups trying to add more consumer protection.

Here are just a few bills trying to be passed that you can support:

S. 1395 –110th Congress (2007): A bill to prevent unfair practices in credit card accounts, and for other purposes, GovTrack.us (database of federal legislation) http://www.govtrack.us/congress/bill.xpd?bill=s110-1395
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H.R. 2146–110th Congress (2007): To amend the Truth in Lending Act to prohibit universal defaults on credit card accounts, and for other purposes, GovTrack.us (database of federal legislation)
face=”Times New Roman”>http://www.govtrack.us/congress/bill.xpd?bill=h110-2146

H.R. 3010–110th Congress (2007): To amend chapter 1 of title 9 of United States Code with respect to arbitration, GovTrack.us (database of federal legislation) http://www.govtrack.us/congress/bill.xpd?bill=h110-3010

To file a complaint or gather more information visit the Federal Reserve at: http://www.federalreserve.gov/consumers.htm