NEW YORK (MONEY Magazine) - Most of us have credit cards. Here are some things to keep in mind when dealing with them and with credit card debt.
57. When you have too much debt.
Total loan payments should eat up no more than 36 percent of your pretax income. If you spend more than 10 to 15 percent of your income on nonsecured debts such as credit cards, you could be in trouble.
58. The difference between debit and credit cards.
Beyond the obvious (with a debit card, the money comes directly out of your account when you make a purchase; with a credit card, you pay at the end of the month), different legal protections apply.
With debit cards, you don't have the same right to dispute a charge. If your card is stolen, most issuers match the $50 credit-card loss limit. But because the money is gone from your account, you may have to wait a few days to get it back.
59. Rewards cards don't always pay.
If you carry a balance on a credit card, stay away from rewards cards. The higher rates you tend to pay will wipe out the value of any perks you earn. Instead, look for cards with low rates at sites like Bankrate.com. But if you pay your bill in full each month, it's fine to treat yourself to rewards.
60. Fixed rates aren't always.
A fixed rate on a credit card is only fixed until the issuer changes it. By law, the card issuer must notify you 15 days before the change in terms.
61. How long will it take to pay off your credit card.
If you pay only the minimum each month, it will take a really, really long time. Most cards require a minimum payment of just 1.5 to 2.5 percent of your balance.
If you pay 2 percent of a $4,000 balance with 15 percent interest each month, you will need almost 30 years to pay it off, and you will end up spending more than $6,000 in interest.
62. What you look like to lenders.
The easiest way to check your credit score and credit history at the three major credit bureaus (Equifax, Experian and TransUnion) is to order all three reports from Fair Isaac at myfico.com for $38.85.
The most important factor in your score is a record of on-time payments. Next is your credit-utilization ratio, or the amount of debt you owe vs. how much credit you have available. (It can hurt to max out all your accounts or to barely use them.) The longer your relationship with a creditor the better, so getting rid of cards that you've held for many years may temporarily hurt your score. Be especially careful about closing accounts within six months of applying for a major loan.
63. Your credit affects your home and car insurance rates.
Insurers have found a link between poor credit habits and the likelihood of filing claims -- and charge accordingly. That's just one more reason to pay those bills on time.
64. Refinancing doesn't apply only to mortgages.
You can refinance just about any loan, but each move has potential pitfalls. You can consolidate federal student loans (and qualify for the current interest rate) just once. You can also get a new car loan, but lenders charge a higher rate on a vehicle that's not brand new.
The way to refinance credit-card debt is through a balance transfer. You can find lots of 0 percent balance-transfer offers, but issuers will often apply a much higher interest rate for new charges.
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