Credit card wisdom

For the first 25 years of my life, I was an all cash, no credit, type of guy. Then I got married, went to college, and got credit cards. I thought I knew what I was doing, but I realize now that I'm still a little green behind the ears. Here's some things that I've learned over the past couple years, courtesy of my credit cards:

Get a paper statement for your credit cards
There are some people for whom the online statement is great, because there's less paper generated, less mail to go through, and less hassle. I'm not one of those people. I'm one of those people who will check my online statement occasionally, but not with enough consistency to spot discrepancies or bogus charges right when they happen. I'm one of those people who needs the physical presence of a paper statement in the mail to remind me to pay my credit card bill and check for problems. Which kind of person are you?

Check your credit card statements every month
I found a charge on my credit card statement that had been appearing monthly for the last five months, for a "free credit report" that turned out to be not so free. The cost of that lesson? About $60, after American Express did a chargeback on the last two charges. Ouch.

Don't use credit cards except for major purchases, and even then…
Even then, don't use your credit card unless you already have the money set aside. It's too easy, when the money doesn't immediately come out of your bank account, to feel like you haven't spent it. It will come back to bite you when you least expect it.

A small example of the "bite you" effect: I had our PG&E set up to be automatically charged to my MasterCard every month. Because of the convenience of AutoPay, I didn't give it a second thought. This month, I look at my PG&E account online, and find that I owe about $180.00, or three months of energy use. For some reason, AutoPay automatically didn't pay, so I have been spending my "extra money" that should actually have gone to pay my utility bills. Sometimes I feel so oblivious to the most obvious things.

Be smart about credit card use
I know, I know, every personal finance guru says this, but it doesn't hit home until you make a few mistakes. After that, you're all vigilant about your finances, but each cent that you didn't have to spend in bogus charges and late fees is a cent that could have been used for enjoyment, or gasp, for investing.