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Monday 14 august 2017 BUSINESS
A24

How well do you know your credit cards?

By MELISSA LAMBARENA If a card doesn’t charge
NerdWallet an annual fee, you may be
Using a credit card doesn’t better off leaving the ac-
require much effort or ex- count open and making
perience. Swipe, insert or the occasional purchase
click and you can charge with it to keep it active.
what you want within the
credit limit. Understand- WHAT CAN A CARD DO FOR
ing credit cards, however, YOU AFTER A PURCHASE?
takes some knowledge. Many credit cards offer
The more you know about substantial protections
credit cards, how they work for qualifying purchases.
and how they fit into your fi- Check with your card issuer
nancial life, the more likely for benefits, which may in-
you are to use them wisely. clude:
Here are some common —Extended warranty can
questions and answers add up to a year of cover-
about credit card basics. age if there’s a manufac-
turer’s warranty.
HOW DO CREDIT CARDS AF- —Purchase protection cov-
FECT YOUR CREDIT SCORE? ers theft and damage up
Using a credit card has an to 90 days after purchase.
impact on two of the big- —Price protection refunds
gest factors in your credit the difference when items
score: credit utilization and In this June 15, 2017, photo, a customer inserts a credit card to buy gas in Haverhill, Mass. are advertised at a lower
payment history. Associated Press price later.
—Utilization is the percent- — every month. But some such as “no interest for 12 hurt your credit score. —Return protection offers
age of available credit cur- card issuers report only to months” often hides the Renee VerCruysse of Perris, a refund for items a store
rently used. If you have a one or two, or even none. If fact that interest is accru- California, says she learned won’t take back.
limit of $5,000, for example, you’re trying to build credit, ing on a purchase. This is that the hard way. “I signed Beyond those protections,
and a balance of $1,000, look for a card that reports known as “deferred inter- up for a couple of credit many cards offer benefits
utilization is 20 percent. to all three; if it’s not clear, est,” and it’s commonly cards not knowing what such as rental car insur-
Utilization tends to have a contact the issuer. This way, found with credit cards is- the conditions were,” Ver- ance, free credit scores or
negative impact on credit payments will show up in sued by retailers. Cruysse says. online shopping discounts.
scores once it passes 30 your credit score, regard- With deferred interest, if After she closed a card, her Details, and answers to
percent. less of which report was you pay off the purchase credit score suffered. When other questions, are in your
—Late or missed payments used to calculate it. within the promotional pe- VerCruysse applied for a card member agreement,
can put a dent in your riod, you won’t pay inter- car loan, she said she was which you can access on-
credit score, although the MUST YOU CARRY A BAL- est. But if any amount in rejected due to the drop line if you threw out the pa-
extent of the damage de- ANCE TO HAVE A GOOD the balance is left over at in her score and her short per version.q
pends on your overall cred- SCORE? the end of the promotion, credit history.
it. If you don’t know the an- interest can be charged
How you use credit cards swer, you’re not alone. A on the entire amount, go-
can have a far-reaching knowledge gap exists for ing back to the time of the
impact on your finances. many people, according purchase. A balance of
Your credit score affects to Rod Griffin, public edu- even 25 cents could mean
your ability to borrow mon- cation director at Experian. that you’ll have to pay hun-
ey for major purchases “They’ll hear things like you dreds of dollars in interest.
such as a car or home as should use 30 percent of By contrast, on bank-issued
well as how much you’ll your credit limit to have credit cards with 0 percent
pay in interest. good credit scores, which APR promotions, interest
is not true,” Griffin says. doesn’t accrue.
HOW DO CREDIT CARDS AF- There’s no requirement that
FECT YOUR CREDIT REPORT? you carry a particular bal- WHAT HAPPENS IF YOU
Credit score is calculated ance to achieve or main- CLOSE A CREDIT CARD?
from information in your tain a good score. Closing a credit card ac-
credit report. Most big card count lowers the amount of
issuers report account ac- DOES ‘NO INTEREST’ AL- credit you have available,
tivity to the three major WAYS MEAN NO INTEREST? which can increase credit
credit bureaus — Experian, Promotional language utilization — and possibly
Equifax and TransUnion