Anyone who has taken shop classes knows that tools can be exceptionally useful things. In skilled hands, they can transform the most unpromising wooden plank into a functional household item or an object of art. In the wrong hands, though, even the simplest hand tool has the potential to cause destruction and injury.
At a glance
North Bellmore, N.Y.
Temple University (bachelor of arts in journalism)
- Worked at WABC-TV in New York in the investigative, consumer and general news departments
- Investigative consumer reporter for WGGB-TV, the ABC affiliate in Springfield, Mass.
- Former executive director of the national nonprofit consumer group Bankcard Holders of America
- Research associate at the National Bureau of Economic Research.
- Joined Consumer Action in October 2006 as deputy director of national priorities
The same thing can be said for credit cards. Used wisely, plastic can be a convenient tool through which you can establish and build up a sound credit history. But when misused, a credit card can ruin your credit record, hobble your personal finances and even sever potential employment opportunities.
To gain some insights about the ins and outs of credit cards and how to use them to their best advantage, Bankrate spoke with Ruth Susswein, deputy director of national priorities at Consumer Action, a national nonprofit advocacy and education organization.
What advantages does a credit card offer to users?
A credit card, of course, gives you the opportunity to take out an immediate loan whenever you want to make a big purchase -- without first having to go to a bank and request that loan. A credit card also affords you some "float" with your money, meaning that you don't have to commit all of your money at one time to making a major purchase. And if you're new to the world of credit, using a credit card wisely is a terrific way through which you can establish a credit history.
What do "newbies" need to be aware of when they apply for their first major credit card?
It's most important to look at the card's APR (annual percentage rate), because so many of us underestimate the way that we'll pay off our bills. We never expect to get a late fee; we never expect to go over our limit. Yet, sometimes, through no fault of our own, we do, and then we deal with all of these punitive fees. So realize that even though you may not intend to carry a balance, in the event that you do -- and the majority of us do -- make sure that the card that you get has either a low rate or a reasonable rate, and then look at the other fees.