A consumer is said to be Credit-smart if they understand the pros and cons of using a credit card, the problems of using it improperly, and if they work hard to maintain their credit rating. A credit-smart consumer:
· Understands that Credit Cards are items that are there only for your convenience, not tickets to live beyond one’s means and purchase whatever they want.
· Understands that it is not necessary to carry more than one or two credit cards and they never should carry a credit card balance.
· Understands the differences between “healthy” and “unhealthy” debt. “Healthy debt”:
o Is for a limited amount that won't keep increasing (a revolving account, such as a credit card, is not limited, and the credit balance increases as you add more to it).
o Has a stable interest rate, at a reasonable, predictable level.
o Has a regular payment amount that is manageable within a budget, and can be paid on time to avoid late fees and penalty interest-rate increases.
o Has been acquired for a purpose that an average person would say was sensible such as buying a home. (A good test is whether you will remember in six months why you have the debt -- using credit for coffee drinks or CDs usually can’t pass this test.)
