Fed Offers Vital Credit Card Tips for Black Friday Kick-off

The Federal Reserve wants “Black Weekend” shoppers to use their credit cards wisely, so it is placing 45-second ads to drive the message home in movie theaters through Dec. 3.

The ads will appear before movie previews at 12 “highly-attended theaters in major metropolitan areas,” the Fed announced. The ads provide tips for getting the most from credit cards, including advise on paying on time, staying below the card’s credit limit and avoiding unnecessary fees.

In additiion, several Federal Reserve Banks will make consumer literature available in the theater lobbies. The Fed is also working with some credit counseling organizations, in creating “their own responsible credit use campaigns.”
 
You don’t have to go to a movie theater to see the detailed advise on credit card use. Here is an overview of the Fed’s five tips:
 
1. Pay on time.
Don’t let the busy Christmas season make you forget that making your credit card payment on time is the best way to avoid fees. Whether it’s the minimum payment due or more, as is generally advised, not being late keeps your interest rates from going up due to penalty fees, and maintains your good credit record. The Fed adds: “If your bill is due at an inconvenient time of the month — for example, if it’s due on the 10th and you get paid on the 15th — contact your credit card company to see if they will change your billing cycle to fit your cash flow.”

2. Stay below your credit limit.
If you charge more than your available credit limit on your card, you have given your card issuer the ammunition to hike your interest rate to a higher penalty rate. Avoid this scenario by keeping a record of your spending or check your balance online regularly. The Fed adds: “Also, be aware that some merchants (for example, hotel and car rental companies) put a “hold” on your credit card based on their estimate of the amount you will charge. This can reduce your available credit until the final charge is processed.”

3. Avoid unnecessary fees.
The list of fees that credit card companies can impose is long. Card issuers can charge charge late payment, over-the-limit fees, as well as fees for cash advances, transferring balances, and having a payment returned. Some charge a fee when you pay your bill by phone. Review carefully your account terms to find out what transactions trigger what fees. The Fed also advises: “If you need a cash advance, withdraw enough so that you don’t have to take a second cash advance — and incur a second fee — later in the month.”

4. Pay more than the minimum payment.
These are difficult economic times, and the following advise may be difficult for many to follow. But if you can’t pay your balance in full each month, pay as much as you can. Over time, you’ll pay less in interest — money that you will be able to spend on other things — and you’ll pay off your balance sooner. See the Federal Reserve’s Credit Card Repayment Calculator to determine possible repayment timelines.

5. Watch for changes in the terms of your account.
Starting in February, new laws will require credit card issuers to give customers clearer language and more time before modifications to account terms take effect. But, for now, credit card companies can change the terms and conditions of your account virtually at will. They will send you advance notices about changes in fees, interest rates, billing, and other features. Read these “change in terms” notices, and then you can decide whether you should change your card habits. The Fed adds: “For example, if cash advance fees increase, you may decide to use a different card for cash advances. If you have a card with a variable rate or if you have an introductory rate that is ending, be aware that credit card companies are not required to send you a notice about raising your interest rate. Interest rates are listed on your monthly bill. Read your bill carefully and take note of any changes.” 

Read more from the Federal Reserve’s website.

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