Credit Card

Avoiding Credit and Charge Card Fraud

2008-12-02T04:05:00.000-08:00

A thief goes through trash to find discarded receipts or carbons, and then uses your account numbers illegally.

A dishonest clerk makes an extra imprint from your credit or charge card and uses it to make personal charges.

You respond to a mailing asking you to call a long distance number for a free trip or bargain-priced travel package. You're told you must join a travel club first and you're asked for your account number so you can be billed. The catch! Charges you didn't make are added to your bill, and you never get your trip.

Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of fraud, it can occur in other ways. For example, someone may use your card number without your knowledge.

It's not always possible to prevent credit or charge card fraud from happening. But there are a few steps you can take to make it more difficult for a crook to capture your card or card numbers and minimize the possibility.
Guarding Against Fraud

Here are some tips to help protect yourself from credit and charge card fraud.

Do:

Sign your cards as soon as they arrive.
Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.
Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.
Keep an eye on your card during the transaction, and get it back as quickly as possible.
Void incorrect receipts.
Destroy carbons.
Save receipts to compare with billing statements.
Open bills promptly and reconcile accounts monthly, just as you would your checking account.
Report any questionable charges promptly and in writing to the card issuer.
Notify card companies in advance of a change in address.

Don't:
Lend your card(s) to anyone.
Leave cards or receipts lying around.
Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.
Write your account number on a postcard or the outside of an envelope.
Give out your account number over the phone unless you're making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

Credit Card Fraud Prevention Tips

2008-12-02T03:26:00.003-08:00

Internet ScamBusters' 21 Credit Card Fraud Prevention Tips:

1. Keep an eye on your credit card every time you use it, and make sure you get it back as quickly as possible. Try not to let your credit card out of your sight whenever possible.

2. Be very careful to whom you give your credit card. Don't give out your account number over the phone unless you initiate the call and you know the company is reputable. Never give your credit card info out when you receive a phone call. (For example, if you're told there has been a 'computer problem' and the caller needs you to verify information.) Legitimate companies don't call you to ask for a credit card number over the phone.

3. Never respond to emails that request you provide your credit card info via email -- and don't ever respond to emails that ask you to go to a website to verify personal (and credit card) information. These are called 'phishing' scams.

4. Never provide your credit card information on a website that is not a secure site.

5. Sign your credit cards as soon as you receive them.

6. Shred all credit card applications you receive.

7. Don't write your PIN number on your credit card -- or have it anywhere near your credit card (in the event that your wallet gets stolen).

8. Never leave your credit cards or receipts lying around.

9. Shield your credit card number so that others around you can't copy it or capture it on a cell phone or other camera.

10. Keep a list in a secure place with all of your account numbers and expiration dates, as well as the phone number and address of each bank that has issued you a credit card. Keep this list updated each time you get a new credit card.

11. Only carry around credit cards that you absolutely need. Don't carry around extra credit cards that you rarely use.

12. Open credit card bills promptly and make sure there are no bogus charges. Treat your credit card bill like your checking account -- reconcile it monthly. Save your receipts so you can compare them with your monthly bills.

13. If you find any charges that you don't have a receipt for -- or that you don't recognize -- report these charges promptly (and in writing) to the credit card issuer.

14. Always void and destroy incorrect receipts.

15. Shred anything with your credit card number written on it.

16. Never sign a blank credit card receipt. Carefully draw a line through blank portions of the receipt where additional charges could be fraudulently added.

17. Carbon paper is rarely used these days, but if there is a carbon that is used in a credit card transaction, destroy it immediately.

18. Never write your credit card account number in a public place (such as on a postcard or so that it shows through the envelope payment window).

19. Ideally, it's a good idea to carry your credit cards separately from your wallet -- perhaps in a zippered compartment or a small pouch.

20. Never lend a credit card to anyone else.

21. If you move, notify your credit card issuers in advance of your change of address.

Virtual credit card

2008-12-02T03:26:00.002-08:00

Virtual credit cards, an invention of the European banking industry aimed at those too stupid for pet rocks, are marketed primarily through the virtual marketplace known as the Intarweb.

Regular credit cards were enough of a scam; the bank sends clients plastic cards which likely only cost pennies for the bankers to stamp out and which aren't even real money. Once the unsuspecting client accepts the card, suddenly he starts getting bills from the bank every month for hundreds if not thousands of dollars. At that point it's too late, as the bank already has everyone's money.

That person laughing all the way to the bank? That'd be the bank manager. Ha, ha, yoke's on you...

Having gotten away with this, the next scam was the introduction of more new and unexplained service charges. Service? What service? Haven't seen any of that since the days of Robert Service and the Yukon gold rush. If you want to see a real human and not an automatic teller machine at a bank, good luck... banks do employ people, but they're all busy in the back rooms thinking up new service charges.

So, if the public is gullible enough to pay ever-increasing service charges for service that is non-existent, why not take this one step further... create a banking product that doesn't exist either.

And so the virtual card was born and launched online, on the pretext that even though it doesn't exist it could be used in e-commerce transactions where only a card number (and not the physical card itself) is required

Specialty credit cards

2008-12-02T03:26:00.001-08:00

These types of cards are for consumers with unique needs for their credit use, such as business professionals and students. These credit card programs are designed specifically to meet the needs of those individuals.

Business credit cards

These cards are available for business owners and executives and have many of the same features as traditional credit cards: low introductory rates, cash back programs and airline rewards. The difference is these cards come with many additional benefits and perks exclusively for those in the business world.

Some of these bonuses include: Business expenses kept separate from personal expenses; special business rewards and savings; expense management reports; additional cards for employees; and higher credit limits.
Every credit card is a bit different and promotional offers often change, so be sure to thoroughly look over the terms and conditions for each specific card before applying. Compare business credit cards.

Student credit cards

Many college students need a credit card, but they generally have little or no credit history, which makes it difficult to get approved for a traditional card. Student credit cards are specifically designed for those enrolled in accredited four-year colleges and universities to help them build a credit history from the ground up.

Compared to consumer credit cards, student credit cards are often scaled back somewhat in terms of rewards, features and other benefits, but they can still be a valuable commodity. If used wisely, a student can take the first step towards building a solid credit history with this type of credit card. Once they've proven financial responsibility, it will be much easier to qualify for reward cards and higher credit lines. Compare student credit cards.

Bad credit and/or credit repair cards

2008-12-02T03:22:00.004-08:00

Credit can easily go from good to bad due to poor budgeting or simply by an overlap between jobs. If your credit score is less than satisfactory, it does not mean you cannot qualify for a credit card. There are several options available to those who have had bad credit in the past and for those who are currently trying to repair their credit.

Depending on your specific situation, debt consolidation or use of introductory APRs on balance transfers may be wise choices. If you still need credit or want to start repairing your credit by proof of action, there are several credit cards designed to help rebuild poor credit histories.

Secured credit cards

Secured credit cards require collateral for approval. A security deposit of a predetermined amount is needed in order to secure the credit card, and the security deposit generally needs to be of equal or greater value than the credit amount. Collateral can come in the form of a car, boat, jewelry, stocks or anything else of monetary value. Secured credit cards are for people with either no credit or poor credit who are trying to build or rebuild their credit history.
Cards that help rebuild credit often come with low credit lines (such as $250) and additional fees, such as an application fee, may apply. Be sure to read over any terms and conditions for these add-on services before applying. If you use the card responsibly and pay all your bills on time, you can ask for a credit line increase down the road. The extra fees and low credit lines will be worth it if a secured credit card helps you get your overall credit back on track. Compare cards for bad credit.

Prepaid Credit cards

Prepaid cards are not credit cards at all, but are used and accepted just like them. The advantages of prepaid cards is that there are no finance charges and they help you avoid debt since all purchases are paid for beforehand. With these cards you determine the credit line by transferring however much money you'd like to have available to spend to the card. This eliminates the risk of running up credit card debt and makes the budgeting process much easier.
Although most prepaid cards do not charge finance fees, other fees may apply, including monthly fees, startup or application fees, over-limit fees, ATM fees, reload fees and more. Be sure to thoroughly look over the terms and conditions for each specific card before applying. Compare prepaid cards.

Bad credit and/or credit repair cards

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Secured credit cards

Prepaid Credit cards

Airline mile / frequent flier credit cards

2008-12-02T03:22:00.002-08:00

While certain general reward credit cards allow points to be redeemed for plane tickets among other things, there is a subset of reward cards specifically for air travel. This type of card allows consumers to earn airline mile credits whenever they make purchases. Some cards are co-branded with a specific airline, while some are generic and can be redeemed for tickets with a variety of airlines. Points can be redeemed for airline travel, much like frequent flier miles.

Airline-specific credit cards

These cards are associated with one airline. Typically, the cardholder accumulates points from both making purchases with the card and by flying on the specified airline. For example, with Chase's Continental MasterCard, cardholders accumulate Continental frequent flier miles (called OnePass miles) both from spending with the card and from flying with Continental. These cards come with other perks -- for example, some allow you to earn double points when you use the card to purchase plane tickets with that airline. Compare airline-specific cards.

Generic airline miles cards

Credit cards such as Miles by Discover allow you to redeem your reward points for air travel through any airline, travel agent or online travel site. This is a great option for people who aren't involved in a frequent flier program and aren't loyal to any particular airline. It allows you the flexibility of redeeming your miles for whichever airline best suits the needs of your trip. With a generic airline card, you gain points for every dollar spent on the card, but because it is not associated with a particular airline, you can't gain additional points by flying. Compare generic airline miles cards.

Each airline credit card is a bit different, so be sure to read the card's terms and conditions to find out how many miles you gain for every dollar spent. Other things to look for are how many miles you need before you qualify for a free plane ticket, if there is a cap on points that can be earned annually and whether or not unused airline miles expire. Some expire in five years while others do not expire at all. Airline mile reward programs can be costly for credit card companies, so many of these cards come with an annual fee. This type of reward program is beneficial for frequent travelers or those who want to use their card to plan vacations, but the associated fee might make them impractical for other cardholders.

Credit cards with rewards programs

2008-12-02T03:22:00.001-08:00

Reward credit cards allow users to earn incentives for making purchases with their credit card. Points accumulate for each dollar charged on the card, and cardholders can redeem these points for various rewards. Reward cards usually require better-than-average credit for approval. There are seven major types (not including airline miles / frequent flier cards, which we'll discuss a bit later).

Cash back credit cards

This type of credit card allows you to earn cash rewards for making purchases. The more the card is used, the more cash rewards you receive. Most cash back cards earn users around 1 percent of total purchases, excluding interest and finance charges. Some cards offer a higher cash back percentage with increased usage; others offer a higher cash back percentage at select merchants or for particular types of purchases. Since cash back programs are costly to credit card companies, some of these cards have an annual fee that can vary from $50 to $100. This type of card is best for people who are faithful about paying off their balances each month. If used appropriately, a cash back credit card can earn the cardholder a significant amount of money over time. Compare cash back credit cards.

General reward points credit cards

Reward credit cards are similar to cash back cards in that cardholders can accumulate points toward a reward structure, which is based on how much the card is used over time. General reward cards offer cardholders a variety of items to cash points in for: gift cards, electronics, hotel stays, plane tickets, jewelry, pet supplies and more. Some rewards can be attained for 1,500 points; others cost 200,000 points. Reward programs and promotional offers often change; thoroughly review a card's terms and conditions before applying.
Some general reward credit cards come with an annual fee ranging from $50 to $100, although most have no annual fee. Reward cards are best for people who regularly pay off their balances each month. By minimizing their finance charges, individuals will reap greater benefits from the associated rewards credit card. Compare reward points credit cards.

Hotel or travel points credit cards

This is a genre of credit cards specific to hotels and travel. Some cards are co-branded with hotels, such as the Marriott Rewards Visa card, or the Hilton HHonors American Express card. These credit cards allow you to earn points for all purchases, in addition to bonus points for dollars spent on stays at the respective hotel chain. You can redeem your points for free nights and upgrades at the hotel chain your card is co-branded with.
Then there are broader hotel and travel cards such as the Bank of America's MilesEdge Visa, with which points can be redeemed for travel, theme park admission, stays at major hotel chains and more. Blue Sky from American Express is similar -- points can be applied toward plane tickets, hotel stays, rental car use or cruises.
Because these reward programs can be costly for credit card companies, many of these cards come with an annual fee. If you are not a frequent traveler, the annual fee may negate the benefit of the rewards earned. Compare hotel/travel points credit cards.

Retail rewards credit cards

These credit cards are co-branded with a major retailer, such as Disney, Amazon.com or Best Buy. Points are accumulated by making everyday purchases, though cardholders are awarded with double or triple points for making purchases from the co-branded retailer. Reward points must be redeemed for products or services from that specific retailer. With the Best Buy MasterCard, for example, you earn up to 2 percent back from any purchase with the card, and 4 percent back from Best Buy purchases. Cardholders receive the reward money in the form of reward certificates that can be used only at Best Buy. With the Disney Visa card, points accumulate for every purchase, and they can be redeemed for Disney products or vacations. Compare retail rewards credit cards.

Gas cards with points or rebates

Gas cards come in two species: general and brand-specific. General cards treat all gas companies equally, while brand-specific cards favor one gas company. The Discover Open Road card, a general gas rebate card, gives you 1 percent cash back for general purchases but rewards you with 5 percent back for buying gas or having auto maintenance done at any company. The BP Visa, in contrast, will give you a 1 or 2 percent rebate for regular purchases, but you will earn 5 percent rebate only when buying gas at BP stations.
If you tend to be loyal to a certain gas company, a brand-specific card may benefit you, but if you tend to just stop at whichever station is closest, you may be best with a general gas rebate card. Additionally, it's important to remember that a gas company may be very popular in one state, but uncommon or nonexistent in other states, making brand-specific credit cards less than ideal for long road trips. For example, BP is a very common gas station in Florida, but there are few of them in Texas. Sinclair gas stations are in 21 states, but if you have a Sinclair MasterCard and are driving through California, you're out of luck. Compare gas cards.
Automobile manufacturer rewards cards
Auto rewards cards allow consumers to earn points that can be redeemed toward the purchase of a new or used car, auto-related expenses or merchandise. With the GM Flexible Earnings MasterCard, for example, cardholders can opt for cash back rewards, or apply their earnings toward the purchase of a new GM vehicle. This card is most beneficial to those looking to purchase a vehicle in the near future. Compare auto rewards cards.

Home improvement rewards credit cards

These credit cards allow consumers to earn reward points for all purchases, while earning extra points for home-related expenditures. For example, with the Citi Home Rebate MasterCard, you earn 1 percent back on regular purchases, but 6 percent back on purchases involving utilities, cable/satellite TV, Internet connection and telecom for the first year.
Rebates earned are automatically applied to your mortgage principal. Bank of America's Home Advantage World MasterCard works the same way, though points can be redeemed for cash back, travel, gift cards, merchandise if you decide not to apply them to your mortgage. Compare home improvement rewards cards.

Standard credit cards

2008-12-02T03:22:00.000-08:00

These credit cards are the most common and are readily available from most banks and financial groups. They are unsecured, which means you do not have to put down a security deposit to prove the money can be repaid. The way the annual percentage rate is offered or calculated for these cards can vary. Here are two examples:

Balance transfer credit cards

Balance transfer credit cards allow consumers to transfer a high interest credit card balance onto a credit card with a low interest rate. Typical in the market today are balance transfer credit cards with an introductory annual percentage rate (APR) of 0 percent, with that introductory or "teaser" rate lasting several months up to a year. The terms of balance transfer credit cards varies between offers, so be sure to thoroughly read the terms and conditions for each card. Compare balance transfer credit cards.

Low interest credit cards

Low interest credit cards offer either a low introductory APR that jumps to a higher rate after a certain period, or a single low fixed-rate APR. Low interest cards can be very useful when consumers need make a large purchase because it allows several months to a year to pay it off with very low or no interest. Before using a low interest card, read all the terms and conditions of the introductory rate so you will not be surprised by fees or accumulated interest. Compare low interest credit cards.

Types of credit cards

2008-12-02T03:13:00.003-08:00

When you look back at the history of credit cards, they started out simple and standard: Each issuer produced one card with one set of features. Today, credit cards come in multiple levels with ranging interest rates, fees and reward programs, so before you fill out an application, it's important to know which will best suit your financial situation and lifestyle.

The following is a brief description of the most common types of credit cards available.

Standard credit cards :

Balance transfer credit cards
Low interest credit cards

Credit cards with rewards programs :

Cash back credit cards
General reward points credit cards
Hotel/travel points credit cards
Retail reward credit cards
Gasoline points / rebates credit cards
Automobile manufacturer reward credit cards
Home improvement rewards credit cards

Airline miles / frequent flier credit cards :

Airline-specific credit cards
Generic airline miles cards
Credit cards for bad credit
Secured credit cards
Prepaid debit cards

Specialty credit cards

Business credit cards
Student credit cards

Choosing Between Debit and Credit Cards

2008-12-02T03:13:00.002-08:00

Cardholders make a lot of choices. First they must choose whether or not to apply for a card. Then they have to decide which card they want. Their choices include 0% interest cards, reward cards, charity cards, and so forth. But now there’s another choice for cardholders to make: debit or credit? Which card suits your needs better? Is one payment method superior to the other?

Debit Cards

Debit cards are a convenient choice for everyday purchases. You swipe them at cash registers and gas pumps just as you would a credit card. Debit cards pull money straight from your bank account. There is no interest involved, and no monthly payments to worry about. If you tend to carry a balance on your credit cards from month to month, debit cards might be a good alternative.

Still, buyers should pay careful attention to their bank balances when using debit cards. Most debit cards won’t be declined until you’re overdrawn by hundreds of dollars, and each overdrawn transaction will cost you big.

Also, debit card users aren’t subject to the same amount of purchaser protection that credit card users enjoy. For example, purchases made with credit cards can be reimbursed if the merchandise turns out to be shoddy. When you buy something with a debit card, you’re pretty much stuck with the purchase unless you can get an old-fashioned refund from the seller.

Credit Cards

Credit cards offer variety, perks, and consumer protection. They also come with the temptation to make purchases now and pay for them months later. If you’re not careful, it could even take years to pay off that family vacation or Christmas shopping spree! The number one rule for credit cards is this: Pay your balance in full every month. If you don’t, interest rates and finance fees will inflate the cost of your purchases.

For those who pay off their monthly balances, credit cards are good financial tools that offer benefits not found with debit cards. For instance, some credit cards offer cash rebates for daily purchases like groceries and gas. Others help frequent travelers rack up free airline miles. Special-interest credit cards put money toward a variety of good causes, from college funds for children to veterinary care for pets. Still others donate a portion of all purchases to the charity of your choice.

Credit cards offer other bonuses as well. Many provide rental car insurance and roadside assistance. Their greatest benefit is the protection they offer against fraud. If someone uses your credit cards to make unauthorized purchases, you won’t be liable for the costs. Also, if you purchase an item that turns out to be faulty, you can receive a reimbursement from the credit card company.

Are credit cards superior to debit cards, or vice versa? The answer depends on what kind of buyer you are, and what kind of perks you want. If you’d rather not deal with monthly payments, debit cards are a good choice. But if you want to build up your credit score and enjoy some rewards along the way, credit cards are your best bet.

When You Go Christmas Shopping, Leave the Cards at Home

2008-12-02T03:13:00.001-08:00

That's the advice of financial experts all over the country. They've told us year after year that the Christmas shopping season is a huge temptation to overspend, and that we can stick to our budgets better when we pay in cash. But did we listen? No. And now we're feeling the squeeze of all that accumulated debt.

We did it with the best of intentions. Maybe we knew that we couldn't afford those purchases, but we didn't want our kids to go without. Or maybe we spent too much on food and entertaining expenses so that our families could enjoy their time together. Whatever the reason, we consumers took our eyes off of the real treasures of the holiday season and bought too many budget-busting gifts and items – many of which we’re still paying off.

The latest Consumer Action poll found that 69% of Americans will be paying in cash during the 2008 shopping season. It sounds like Christmases past have left us with a nationwide case of buyer’s remorse, and now we’re trying to repair the damage without putting ourselves deeper into debt.

If you, like many Americans, are still paying off your purchases from last Christmas, here are some sound tips for keeping you out of the red this holiday season.

Make a List and a Budget

When you go shopping, you need a plan. Look over your finances and decide who you should buy for, and how much you can afford to spend on them. Then take a deep breath and exert some self-control. Stores are designed to make you spend money. Stick to your plan, and you’ll be fine.

Leave the Cards at Home

If you’re trying not to use your credit cards this year, having them in your wallet might be too much of a temptation when you see discounted items that aren’t on your list. Studies show that consumers spend almost 20% more when shopping on credit. Remember your dwindling cash reserves and stick to your shopping list.

Use Layaway

Some major stores like K-mart have reinstated their layaway programs. If you can’t afford a lump sum purchase, put the items in layaway. Unlike credit card purchases, layaway buys won’t be compounded with hefty interest. They also have a definite due date by which they must be paid in full, unlike credit cards which can keep you paying for years with minimum payment amounts.

Learn to Say No

Tell your kids, friends, and relatives when you simply can’t afford to make a purchase or host an event. Millions of Americans are weathering financial hardship this year. The topic is no longer considered taboo, and people are more understanding than ever.

And what will you say when a store associate offers you a tempting deal on a new department store credit card? “No, thank you.” Have confidence in yourself, stand firm, and enjoy your cash-only shopping season.

What is a creditcard?

2008-12-02T03:13:00.000-08:00

A credit card is part of a system of payments named after the small plastic card issued to users of the system. The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. A credit card is different from a charge card, which requires the balance to be paid in full each month. In contrast, credit cards allow the consumers to 'revolve' their balance, at the cost of having interest charged. Most credit cards are issued by local banks or credit unions, and are the same shape and size, as specified by the ISO 7810 standard.