Paying Credit Cards Early Could Get You Perks - WTVM.com-Columbus, GA News Weather & Sports

Paying Credit Cards Early Could Get You Perks

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Paying your plastic on time may pay off because if you do, some credit card companies think you deserve a reward.

It's just one type of financial treat they are using to lure you into getting a new credit card.

Cheryl Laughlin decided to take the bait.

She had lyme disease and came up with a gem of an idea to start her own jewelry business.

There was just one problem.

Laughlin explained, "I was only doing freelance work at the time, so I was just racking up the medical bills."

Her bills were in the thousands, making it tough to start her business.

She commented, "I really needed a way to, you know, pay them with a credit card and kind of float them for a while until I could get regular work or regular business."

In the wake of the financial crisis, consumers are cautiously using plastic again, while remaining focused on paying down debt.

Greg McBride with Bankrate.com said credit card issuers have taken notice, luring high-risk customers with attractive offers.

He said, "Credit card issuers, they don't issue a card that's designed to be a one size fits all for everybody. Instead, they issue a variety of different cards, each one targeted to a specific type of consumer."

The latest trend is rewarding consumers who pay on-time, or pay more than the minimum.

Perks include cash back or interest rate rebates.

Joe Ridout with consumer action explained the perks provide incentive to pay down debt, but be careful.

Ridout said, "If you carry a balance even a couple of times a year, the interest you're going to pay on a rewards card, which is always going to be higher, that will generally outstrip whatever rewards you're building up."

If you have trouble paying your monthly bill, there are now credit cards that will spare you late fees and penalties.

In order to make the most of the card you choose, experts recommend you evaluate its incentives, pay off your debt before any interest free period is up and focus on paying your balance in full each month.

Ridout said, "That will do two things. It will keep you out of debt but it will also help establish a strong credit history."

Laughlin will soon be debt-free and her business is thriving.

She credits her credit card for the success.

Keep in mind, cards that reward good financial behavior still charge a fee if your monthly payment is late.

If you're more than 60 days delinquent, your APR could take a big hit.

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