Credit Card Tips and Traps

There are credit card traps that aware consumers can avoid.

Credit cards offer convenience, allowing card users to buy items on credit and avoid carrying around large sums of money. To obtain a credit card, you enter into a contractual agreement with the issuer to adhere to certain terms, including making minimum monthly payments on time. Credit cards can be beneficial, but they can also adversely affect your finances if you fail to keep your spending under control. There are a few traps card users can avoid.

Make Timely Payments

Once you begin to use a credit card, you will receive statements outlining your purchases for the previous month and other billing details. You'll also receive a payment date. As soon as you get your statement, review it and send in your payment. Late payments can hurt your credit rating.

Stay Within Your Limits

You have a credit line you should never exceed. If you go above your limit, you may incur charges from your credit card provider along with a higher interest rate. Card issuers have no requirement to automatically decline purchases that cause you to exceed your limit.

Be Mindful of Fees

You can easily avoid late fees, but there are less obvious fees that can affect your finances. Some credit card issuers charge annual fees. Others impose fees for cash advances and balance transfers. You may also face a "convenience" fee for making a payment by phone. Familiarize yourself with your credit card agreement to avoid unnecessary fees.

Identity Theft

Protect your credit card number, sharing that information only with legitimate merchants. If the wrong person obtains your personal financial information without your permission or knowledge, thieves can run up charges on your account and open new accounts in your name.

Credit Card Fraud

Thieves do not need to take your identity to steal from you. Sign all credit cards when you get them, save receipts and compare charges on your monthly statement with purchases made. Report any questionable charges to the credit card company. You may need to submit your complaint in writing before the company corrects an error on your account. Monitor your credit card reports for signs of fraud, advises The Wall Street Journal.

Credit Card Scams

If someone guarantees you a credit card for a fee payable in advance, most likely this is a scam, according to the Federal Trade Commission. People with credit problems are the usual targets of con artists seeking to extract cash from you. Bankrate.com also warns consumers not to purchase credit protection they do not need when shopping for cards.

References

• Baldwin Wallace College: Your Guide to Using Credit Wisely
• Office of the Comptroller of the Currency: Answers About Credit Card Fees and Charges
• State of New Jersey: Protect Yourself from Identity Theft
• The Wall Street Journal: Identity Theft & Credit Card Fraud -- How to Protect Yourself
• Bankrate.com: Credit Cards: Beware the Scams