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Personal Money Management

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Division of Agricultural Sciences and Natural Resources

Using credit cards wisely

Credi cardsWhat do credit cards and power saws have in common?

Both are tools that can make certain tasks easier to complete, especially when they are used properly.

Just like any tool, a credit card can help or hurt a person’s finances, said Cindy Clampet, Oklahoma State University Cooperative Extension assistant state specialist, family resource management.

“Credit cards are a great option when you use them responsibly, but when they are used irresponsibly, they can lead to serious, possibly long-term problems that could affect multiple areas of your life,” she said.

Credit cards give consumers the flexibility of making larger purchases and they are safer to use than cash. If a card is lost or stolen and it is reported in a timely manner, typically the consumer is only responsible for up to $50 of the fraudulent charges.

On the other hand, credit cards make it easy for people to overspend and they could end up paying far more than the purchase price when possible annual membership fees are added in along with late fees and interest on balances that are not paid in full by the due date.

“Keep in mind credit cards are linked to banks. Essentially every time you use your card, the bank is loaning you money,” Clampet said.

Typically, there is a grace period of 20 to 30 days for consumers to pay off purchases on the card without adding any interest charges.

If the grace period expires and the entire balance is not fully paid, interest will begin to build up. Interest, or a finance charge, is added each month the balance remains on the card, usually ranging between 10 to 20 percent interest per year, or APR.

In addition to interest charges, consumers could be hit with late-payment fees, which can add up to $25 per month to the balance, as well as over-the-limit fees, if they go over the limit on the card set by the credit card company.

“A credit card is a big responsibility,” Clampet said. “As long as you use it wisely, it can pay big dividends.”

Here are some good habits to cultivate when using credit cards:

  • Pay the balance in full when the bill arrives. If the payment must be mailed, allow enough time for the credit card company to receive it by the due date.
  • Do not exceed the credit limit set on the card.
  • Keep track of the charges and budget for them.
  • Pay off any open credit card balances as soon as possible.

For more information about personal money management, contact the nearest county Extension office and download free OSU Fact Sheets on the topic, including T-4157 “The Financial Puzzle: Using Credit Wisely,” at factsheets.okstate.edu.




Leilana McKindra
Communications Specialist
Agricultural Communications Services
158 Agriculture North
Oklahoma State University
Stillwater, OK 74078
Phone: 405-744-6792
Fax: 405-744-5739
Email: leilana.mckindra@okstate.edu

Oklahoma State University - Stillwater, OK 74078