Credit cards can be beneficial in many ways to an individual’s finances. When used properly, they offer consumer protection on purchases, greater security than carrying cash, a financial cushion for emergencies and are inexpensive. However, there are many reasons that credit cards can hurt a consumer’s personal finances. Some of the uses of credit cards have their root cause in ignorance, while others are due to a lack of responsibility. The following are a few of the most common things people do with their credit cards that should be avoided.
Saying your credit card number where others can hear
The physical credit card is simply a convenience. A consumer can simply show or swipe it on a machine without having to memorize the digits. But that means that anyone with access to the number can use the credit it represents. So consumers must be careful when mentioning the number, such as in phone transactions, because anyone within earshot can take down what is said and use it for nefarious purposes. If consumers have to speak the number, the safest way is to do it in isolation or by turning away from public hearing. They can also lower their voice and cup their mouth.
Entering the number on a public and unsecured network
It’s convenient, efficient, and money-saving to be able to use your laptop, tablet, or smartphone on the public wifi networks offered by coffee shops, in public libraries, or when riding some public transportation. Busy people can multitask, such as by sipping coffee or traveling to the office, while continuing to get work done online. However, that free Internet access is not secure, allowing anyone with the proper tools to eavesdrop on whatever is being accessed. Performing financial transactions that involve a credit card number is unsafe because anyone can watch and capture the number without the consumer’s knowledge. For greater security, such transactions should only be performed in protected networks, such as at home or at work.
Writing down the number even in email
The physical credit card can be tracked and kept secure in a wallet or purse. If the number is written on a piece of paper, the paper can be lost or taken by someone and viewed, exposing the account to people who may have bad intentions for it. Putting the number in an email is worse because that form of communication is not secure. The email has to pass through several intermediary computers before it reaches its final destination. At any point in the journey, it can be intercepted and the number stolen. If someone requests a credit card number in writing, it’s best to phone him or her and recite the number verbally. If that’s not possible, sending a fax with the number is slightly safer than sending the information via email or letter.
Entering credit card details in an unsecured website
Online shopping is only possible because websites allow the entry of credit card details to make a purchase. But such entries pose the same risks as emailing or posting photos, if the website does not encrypt the information. Unsecured websites use “http” (Hypertext Transfer Protocol) in their address bars, indicating that data is transmitted in plain text, which contains no security features. To make online transactions safer, shopping sites use “https” (Hypertext Transfer Protocol Secure), which encrypts sessions using a Digital Certificate, making information harder to hack. Consumers must be sure that websites that demand their financial information use this standard.
Throwing away an old credit card in one piece
As a security measure, a credit card has an expiration date. The consumer has to use an unexpired version for it to be valid. However, throwing an old card in the trash can raise issues. Often, the credit card number remains unchanged, so the number on an old card is still correct. Someone digging through the trash could take the card and using the number to make fraudulent charges. The best thing to di with an old card is to either put it through a special card shredder or cut the card into pieces. However, each of the pieces should be thrown into separate receptacles. If they’re all put in the same trash can, someone could put together the cut pieces to decipher the number.
Paying only the minimum
The minimum payment specified on the credit card statement is the smallest amount a consumer must pay to remain in good standing with the issuing company. It has little to do with getting out of debt. Consumers who only rely only on the minimum payment will never pay off the balance, if they keep buying with the card, and will pay more in interest. Savvy buyers should pay all of their bill or more than the minimum to eliminate their debt more quickly.
Paying late once or twice increases the interest owed and incurs late charges. Paying late frequently can also damage the consumer’s credit score, which can lead to higher rates and make additional credit more difficult to get. If the cause of late payments is slow mail service, credit-card holders can often pay their bills instantly by using the credit card website. Consumers who are interested in this convenience must set up it up in advance with their banks. Credit card companies may need several business days to ensure that payments are possible from the specified bank account.
Not checking credit accounts frequently
Waiting until the bill arrives to discover issues with the credit card may be too late. A thief may have had almost a month to rack up thousands of dollars in charges and then disappear so he’s never caught. Consumers need to check their accounts more frequently to minimize any damage. Fortunately, most card companies feature online account access for free. Consumers should check their accounts daily whenever possible.
Federal law generally limits consumer liability to $0 if the victim reports the card stolen before any charges are made. Liability jumps to $50 if the theft is reported within two business days after it is discovered, and to $500 if the the theft is reported within 2 to 60 calendar days. In addition, consumers must spend time and effort straightening up their accounts. The only way to avoid this monetary and time inconvenience is to be vigilant with all credit cards.
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