As the holidays approach, the temptation to overextend your existing credit cards or apply for additional cards can be greater than ever. Airline tickets, rental cars, hotels, holiday meals & spirits, gifts—the list of potential balance-busters is extensive. So what better time for a quick review on the nuts and bolts of credit cards? Keeping a few credit-card basics in mind during this hectic time could help to have a happy holiday season and keep credit in good shape.

1.Charging high credit card balances or opening too many credit card accounts could lower a credit score.

Carrying high balances on credit cards could adversely affect a credit score in that high balances can be construed as signs of being financially overextended. Opening too many new credit card or charge accounts can also be perceived as an indication that the consumer may be spreading themselves too thin, which could also lower a credit score. And keep in mind that every time there is a new application for credit, the creditor checks the consumer’s credit report, which counts as a “hard” inquiry (see #3).

2.Closing credit card accounts won’t necessarily raise a credit score.

Closing credit card accounts can affect a credit score one of three ways, depending on the situation: 1) it may actually hurt the score in that it could increase the balance-to-limit ratio, 2) it may improve the credit score if there are too many open accounts giving a high potential debt, or 3) it may not affect the score either way. Before rushing to close any accounts, remember that older accounts in good standing demonstrate an established favorable credit history, which can positively influence a credit score.

3.Creditor inquiries can lower a credit score, but personal inquiries will not.

When a creditor checks a consumer’s credit report, it counts as a “hard” inquiry, and hard inquiries are included as part of the formula for calculating the credit score. “Soft” inquiries, however, like a consumer checking their own credit report, are not included as part of the credit score calculation. So the good news is, a consumer can check their own credit report and credit score as many times as they like without lowering the credit score.

4.Credit cards should match a person’s particular spending habits.

The type of consumer who carries a balance each month, could try to use a credit card with a fixed, low interest rate. Consumers who buy a lot of electronic or computer equipment may prefer to use cards that offer extra warranty protection, while frequent travelers may opt to use cards that offer traveler’s accident insurance or frequent flyer miles. There’s a whole host of options, so do yourself a favor and choose the one that fits your needs best.

5.Paying more than the minimum payment towards balances each month.

Creditors make money from interest payments from their cardholders. And while it may seem like a nice option to offer a minimum payment amount, be aware that, if only the minimum amount each month is paid, much more in interest charges will be paid over the long run. For example, if a consumer owed $2,000 on a credit card and it takes 52 payments of the minimum of $50 a month, they will have paid $600 in interest. On the other hand, if the consumer pays it off in 23 payments of $100, they will have paid $300 in interest, half the interest of the minimum-payment plan!

6. Consumers can resist temptation by removing their name from credit-related marketing lists.

In accordance with privacy amendments to the Federal Fair Credit Reporting Act, enforced by the Federal Trade Commission, every consumer has the right to “opt out” from marketing lists for credit card companies. The consumer can have their name and address removed from the national credit reporting agency lists for unsolicited credit offers for five years, or for a more permanent solution, permanently. Just complete the online “opt-out" form at www.optoutprescreen.com or call 1-888-5-OPTOUT to request a hard-copy opt-out form.

7. All creditors do NOT use the same criteria in offering credit cards.

Some creditors may be willing to offer a consumer a line of credit, while others may not. In addition to considering the credit score and the information in the credit report, creditors may also use their own criteria in deciding whether or not to extend a line of credit. Ultimately, it’s up to individual creditors to determine whether or not they deem the consumer a good credit risk. However, if a consumer is denied credit, the denying creditor is required to supply the consumer with a copy of their credit report and an explanation of why they were declined.

8. There is a difference between credit cards, charge cards, and secured cards.

A credit card allows a consumer to borrow money and repay it, along with interest. With credit cards, the consumer is able to carry over your balance from one billing period to the next.

A charge card does not offer a revolving line of credit; it provides short-term credit and requires the balance to be paid in full each billing period. If the balance can’t be paid in full, the consumer may be subjected to penalty interest charges, which are often much higher than typical credit card interest rates. Generally, the better the consumer’s credit, the more likely they are to be offered a charge card. American Express and Diners Club are two of the better known charge cards.

A secured card is a credit card backed by money that the consumer deposits into a bank account linked to the issuing credit card company. That account serves as security for the card. Many consumers who do not qualify for an unsecured card may use a secured card to establish credit. Unsecured cards do not require a security deposit.

9. Credit and charge card transactions are protected by the Fair Credit Billing Act.

The Fair Credit Billing Act (FCBA) gives cardholders the right to dispute charges under certain circumstances, and limits cardholder liability in the event of fraudulent transactions. Specifically, consumers are not liable for any charges incurred after they’ve reported their card stolen. And any charges that occurred before the card was reported missing are waived after a $50 fee has been paid to the issuer, as long as the cardholder reports the theft within a reasonable period of time (24-48 hours).

10. Exercise restraint

The allure of instant credit in a palm-sized piece of plastic is strong, but remember—sooner or later, you are responsible for the balance. So, when in doubt as to whether or not you’ll be able to pay for purchase you’re about to put on your card, resist. If it’s an emergency and you have to charge it, develop a plan for how you’re going to pay your bill before it gets out of control. Responsible credit card use will help foster strong relationships between you and your creditors, as well as help preserve your credit, a precious commodity as you go through life.