By Richard Laliberte; Illustrations by Andrew Bannecker
Resist the temptation to open store accounts so you can save 10 or 15 percent on purchases that day. You will you spend more to take advantage of the deal, and you'll trigger an inquiry into your credit history. Though standard procedure, any inquiry can cause doubts about your creditworthiness among other lenders, all of whom have access to your credit. As a result, opening a new card can drag down your credit rating and raise rates by 2 to 3 percent for more important debt like a future mortgage or car loan. If you must open a new card, scan the agreement for the words "universal default," which means that any problem with one card, like a late payment or error, is reported to all your creditors and can trigger across-the-board interest-rate hikes that could cost you hundreds of dollars a year. Call the company and ask to have the default provision taken off your account. If it refuses, find another that will honor your request....and when to fold.
Don't close cards you already have unless you're being charged an annual fee. This can also hurt your credit rating by lowering the grand total of spending limits allowed on all your cards, making you look like a worse risk.