Managing Your Credit Card Balance

Here are some hints for handling your credit balance as a college student who is new to the world of credit cards.

You can set up your account so that you receive printed statements in the mail or paperless statements by email. In addition, you can check your current account information online by setting up a username and password.

One of the first things you can do to help you manage your credit card balance and avoid late fees is to choose a payment method that suits you. Consider these choices:

• Write a check.

Can you count on staying aware and writing a check every month to pay off your bill, leaving time for mailing and processing? If you characteristically keep track of spending through your checking account and use the payment as an opportunity to review your statement, this can be a great choice. Make sure to mail your payment at least seven days before its due to avoid late fees due to extended time in the mail or processing. If you’re concerned about the timing, consider enrolling in the credit card company’s personalized alert service to notify you by email at a time you specify so that you can make your payments on time.

• Set up automatic payments.

If you’re not sure writing a check is the best choice for you, you can consider automatic payments, through which your balance will automatically be deducted from your bank account each month on the date and with the amount you specify. This still has to be done every month, but since you can choose the date, you can set it up way in advance - as soon as the amount due becomes available.

• Pay by phone.

There is sometimes a fee associated with paying by phone, but in a pinch - for example, if you’re trying to make an online payment at the last moment and the network or your own computer is down - the phone is a handy back-up to avoid a late fee.

Discover Cards can be paid at Sears retail stores. Your card may have some locations, such as a credit card office, where you can pay. If it’s in your neighborhood or a location where you characteristically have to do errands anyway, you may find this the easiest way to pay your bill.

There several reasons why you should almost always ignore the card issuer’s suggested minimum payment, even though it may seem attractive.

• Minimize interest. If you pay off the full amount, you pay no interest on your purchase, and your credit card acts as an extended payment plan, not as a loan. Furthermore, often the minimum is barely more than the interest, so if you just pay the minimum, you’re barely making a dent in the principal (the amount of the purchase).
• Avoid building a balance. Once you start carrying a balance, it becomes easier to continue, i.e., you get used to seeing it and it seems less important. But those innocent looking numbers are debt. And whether or not you have student loans, when you’re in college, you don’t need any unnecessary debt.

What If You End Up With a Balance?

There are several strategies you can use if you end up with a balance and need to pay it down.

• Make more frequent payments. The required monthly payment does not mean you can’t pay more often. If you can, make an additional payment mid-statement.
• If you have multiple cards, pay off the one with the highest interest first. This strategy will save you the most money, and help you focus your payments step-by-step until you’re back in the black.
• Consider a balance transfer. Many cards offer an introductory rate that is very low - sometimes even 0% - for a short duration such as 6 months to lure new customers. If and only if the interest percentage after that is reasonable and if and only if you can keep track of it when the introductory rate ends - and if you can qualify for the card - this may be a reasonable alternative to cut your interest rate and allow you to quickly pay down the card.