Most of us have a credit card and have heard at least one warning about their use, such as theft, fraud and costly monthly interest. However, financial advisors suggest that if you are careful with your credit card and use it wisely, then its an excellent way to gain a high credit score. Lets look at how you can reduce the risks associated with the use of your credit card, and how you can use it wisely.
Cyber thieves steal your credit card information and sell this to other thieves, or they use it themselves to purchase goods and services. However, you can reduce the chances of this happening by using a reputable anti-virus program when shopping online.
Security experts also recommend using PayPal for purchases when shopping online, rather than shopping on a website directly. PayPal gives you added security, and this makes it harder for cyber criminals to steal your credit card information. Using the website of a service or product provider directly opens you up to theft as cyber criminals skim credit card details from a browser as you type your details into a computer.
Another way that a cyber thief can steal your information is when you shop at a store. Credit card criminals hack into the point-of-sale machine and steal your information.
It is also important to be aware that cyber criminals can use your mobile phone to steal your details. Criminals will often call you repeatedly, but only let the phone ring once or twice before hanging up. The criminals are then hoping that youll return the call so that they can then hack into your mobile and steal any credit card information stored in there. You can combat mobile phone information theft by not storing your credit card or banking details on your phone and by not calling the number back on your mobile.
Effective Credit Card Use
To use your credit card effectively, so you dont incur a great deal of interest, and you increase your credit score, you need to be vigilant. Consider spontaneous purchases and buying big ticket items carefully, before you take action, as this could be difficult for you to pay off.
Lets look at some more tips that you can use to manage your credit card effectively:
1. Use your credit card sparingly: Only buy items that you need, rather than want. Its also important to consider how youll pay back your purchase, before you buy, and always determine when youll be able to make the payment.
2. Buy small ticket items: When buying, try to purchase what you can pay back in a month. Using this philosophy will enable you to keep your credit card interest down, and it will build up your credit rating. Never fall into the trap of making just the minimum payment monthly. Otherwise, you will end up paying too much interest on your purchases.
3. Set up direct debit: So that you maintain a high credit score, set up a direct debit that pays off your credit card balance monthly. Using this feature will make you more accountable for spending and it will give you greater control over debt.
4. Always check your credit card statement: When your statement arrives, go through the payments that have been made to make sure that these are your purchases and not someone elses. If you suspect fraud, then report this to your credit card provider. Checking your statement also allows you to take stock of your spending habits and how you can improve these.
5. Ensure your credit card works for you: If you have a card that gives you rewards for spending, then you need to be aware that you are often paying a higher rate of interest for this privilege. Therefore, to maximise your return on investment, use your rewards frequently.
Do you want to know more about consolidating your debt? Then contact eChoice, our brokers can help YOU take financial control.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!