Keeping control over your credit cards

The summer vacation season has begun in earnest. Which means it's time for another finger-wagging session on the topic of using credit cards.
First, don't spend more than you can afford.
OK, that's pretty obvious. But Americans are shouldering more than $700 billion in high-interest credit-card debt. Obviously, following the obvious advice is not easy.
How do you keep card use under control?
My own approach is to rely on a bank debit card for most transactions. These are just as safe as credit cards. But they are really like using cash, since each purchase is immediately paid for out of your checking account.
Debit cards provide the convenience of credit cards without the risk of building up big balances that will draw large finance charges.
If you must use a credit card -- a few merchants, including many car rental companies, don't take debit cards -- keep track of what you're spending. The easiest way is to put a little piece of paper in your wallet with your card.
Be sure to pay off the credit-card debt every month before the grace period expires, so you don't get stuck with finance charges.
If you commit the grave offense of carrying a credit-card balance, do it with a card that has the lowest interest rate you can get. Set up a plan for paying off the debt over a specific period, starting with the cards that carry the highest interest rates.
Credit on the road
Beyond taking the dog to the kennel and locating the elusive back-door key, vacationers should take a few financial steps before leaving home, especially if you'll be out of the country.
Tell your credit-card companies you'll be away. This will make it less likely they'll become alarmed and block your account if they see charges from unusual locations.
Pay your bills before leaving, so that missed payments don't leave you with a marred credit rating. If a bill is likely to arrive while you're gone and come due before you return, ask the company what to do. You may be able to pay ahead of time.
Online payment systems make these situations easy, so long as you'll have Internet access while you're away. I've used the Quicken bill-paying system for years.
Make photocopies of all important documents you'll take with you, such as passports, visas, driver's licenses -- and even your credit and debit cards. This will make life easier if the originals are lost or stolen. Take some copies with you and leave a set with someone at home.
Tell the post office to hold your mail, or get someone to collect it for you. This will prevent mail from getting lost or building up in your mailbox and alerting burglars that no one's home. And it will keep identity thieves from harvesting your personal information from the mailbox.
Movable mortgage
E-Trade, the online brokerage and banking company, recently announced an intriguing mortgage -- one you can carry with you when you move from one home to another. After moving to the second home years from now, you'd continue to pay at today's low interest rate.
Is this a great deal? For most people, it probably isn't.
The main problem is the sizable premium the "Mortgage on the Move" charges borrowers. For "conforming" mortgages -- those for amounts of $322,701 or less -- the interest rate is 6.125 percent, 0.75 percentage points more than the 5.375 percent E-Trade charges on ordinary 30-year, fixed-rate mortgages.
Many other lenders are charging 5 percent for these loans, sometimes less.
The E-Trade mortgage can only be used for a home purchase, not a refinancing. And it can be shifted to a subsequent home only once.
Moreover, if you needed a bigger mortgage to buy the second home, you'd be required to borrow the additional money from E-Trade, else you'd lose the portability option. But this would be at whatever rate E-Trade was charging at the time, and you'd face a new set of closing costs.
The borrowers most likely to benefit from such a product are those who are pretty sure they will move to another home that will not require additional borrowing. And they'll come out winners only if interest rates are higher then than they're paying on the E-Trade loan.
XJeff Brown is a business columnist for The Philadelphia Inquirer. E-mail him at brownj@phillynews.com.