Frugal families readily agree credit cards trigger their worst financial nightmares. 99% of the time, nothing good can come from the use of a credit card.
In the good old days when credit card companies issued new cards just because people were breathing, optimistic families loaded-up their wallets with all kinds of imaginary purchasing power. Now, most families struggle to manage credit card debt, fend-off extortionate fees, and guard against electronic thieves and ordinary-looking intruders.
For the sake of maintaining a decent credit score and financing major purchases that cannot wait, you need one credit card. Naturally, you want a credit card with the highest possible credit limit and the lowest possible interest rate. Perhaps not so naturally, you want only one credit card, because interest and fees eat-away at the family budget like termites devour your eaves. Given that paying just the minimum balance can turn a $5 purchase into a $100 obligation, and given that minimum payments can stretch-out your indebtedness for years, you should make every effort to pay-off your outstanding credit card balance every month.
Meanwhile, remain forever vigilant about credit card rip-offs, scams, identity thefts, and other malicious mischief the innocuous-looking little plastic card has power to unleash.
Be on guard against everyday hazards.
Try to anticipate and pay routine expenses with cash. Using your credit card less, you minimize your exposure. That cute young server who delivered your lunch very easily could have written-down your digits and run-up all kinds of charges from a disposable cell phone by the time you returned to the office. According to Scambusters.org, “Research shows that the rate of fraudulent purchases made by cell phones is much higher than credit card fraud on the net.” If you must use your credit card for business expenses, try not to let it out of your sight. Whether or not the server thinks you are rude, watch her process your transaction; then, carefully enter your thoughtful tip and total the amount yourself. Just as importantly, if you know you frequently will use a credit card, find one that includes cell-phone fraud alerts and lets you track the card’s use from your handheld.
Experts sternly counsel never use your credit card on the telephone—especially never give your credit card information on an incoming call. You have no way of authenticating the call or confirming the caller’s identity. Stories abound about rogue telemarketers who have worked briefly for big banks, memorizing the scripts and perfecting their delivery, then going out to test their criminal skills using the banks’ own lists of borrowers. A few even have run their schemes while remaining on the banks’ payrolls. Especially beware of telephone solicitors who demand too much information: The more they ask, the more you should decline.
Be wary about internet purchases.
Before you worry about the security of an internet purchase, be cautious about its frugality. Check the shipping costs associated with your order as well as the price of the item you like. An extortionate shipping fee will wipe-out your deep discount. If a major retailer offers a great online bargain, call your nearest store and negotiate for similar savings in-store. The best stores—Nordstrom, The Home Depot, and Macy’s, for example–often will meet your demands because they value your loyalty
Never give your credit card information to an unsecured site. Your web browser usually will warn you if you are about to transmit your data to a site not properly encrypted. Never respond to an e-mail that requests your credit card data, and be especially cautious about unsolicited e-mails that ask address and telephone information in addition to your credit card digits. Skilled identity thieves can recreate you with just four or five critical numbers.
Most importantly, maintain your anti-virus software, because sophisticated viruses, often enclosed in fake security software, easily can invade your hard drive and steal all of your personal data. If you need antivirus, I recommend Symantec Norton, one of the best. Make sure to use a Norton coupon code prior to purchase. It not only helps to avoid viruses, but also aids to get rid of spyware as well. FBI officials report that nearly three-quarters of internet identity theft now originates in malware, and malicious programs proliferate at that the rate more than 100,000 per day.
Track your spending and read your statements.
Reconcile your credit card statements with your records just as religiously as you review and reconcile your checking account statements. When in doubt, contest. If you see a purchase for which you have no receipt or an expense you could not possibly have incurred, call the credit card company’s fraud line. The best, most reputable credit card companies assure they thoroughly investigate all disputed charges; hold them to their promises. More importantly, the best companies will remove the charge from your bill pending the investigation, so that it does not affect your available credit. Apply similar rules to fees. If you dispute any fee’s legitimacy, contest it.
Move shredding to the top of your list for fun evening activities. Shred credit card receipts and unsolicited credit card applications; unless you really intend to use old credit card statements, shred them, too. Better still, go paperless and do the planet a favour. Do not write down your PIN, and try not to use obvious PINs like birthdays and children’s names; indulge your sneaky, devious tendencies as you make-up PINs, and then commit them firmly to memory.