How to use your credit card sensibly

Most of us rely on the convenience, ease, and flexibility of a credit card from time to time, and in fact many of us use credit cards for day to day spending as well as for special occasions such as Christmas and birthdays. When used sensibly and thoughtfully credit cards can prove to be a valuable asset to the consumers, as it means that you don’t have to worry about writing cheques or carrying around cash, and you can make your purchases easily and quickly both on the high street and online. You can even make telephone orders quickly and easily with a credit card.

In the wrong hands, however, a credit card can be a liability in a number of ways. Not only does it put you at risk of becoming a victim of fraud and identify theft if you are not careful with your card details, but it also increases the risk of you getting into unmanageable levels of debt that could quickly spiral out of control. This is why it is so important to be careful and sensible when it comes to spending on your credit cards.

Avoiding fraud

A credit card is a magnet for fraudsters, and these con merchants rely on consumers that are careless with their details and fail to take precautions when using their cards. Of course, we all need to be careful when using cash machines as there could easily be someone just waiting to obtain your details when you are at the cash machine. Those that leave their cards inadvertently in the machine are at particular risk, and a surprising number of people do this without even realizing – the perfect set up for the fraudster that has just seen you punch in your pin number and now has both the pin number and the card!

However, there are also other ways in which fraudsters can get a hold of your details, often without you even realizing. You should be very careful when you are placing telephone orders – do this in private when you have to provide your card details, and never give out these details in front of people that you do not know and trust. Also, ordering online can pose a risk, particularly if you tend to save your card details on the computer. If you are using a shared computer never save your details, as they could easily be accessed by someone else.

Card users need to look out for phishing scams as well, which are emails that are fake or lead to fake websites, where you will be asked for your credit card or bank details. The only time you should ever provide credit card details is if you are on a secure website that you know and trust, and that you have accessed yourself through the Internet browser. You should also avoid giving out your card details in response to a telephone call that was not initiated by yourself.

Finally, if you realize that your credit card has been lost, stolen, or you notice suspicious transactions on your statement, you need to get onto the credit card company right away. The longer you leave it the more damage the thief can do using your card.

Avoiding debt

Another thing that you need to avoid with credit cards is getting yourself into unmanageable levels of debt. Credit cards are great to use for everyday purchases and are great for those particularly expensive times of year such as Christmas. However, you need to remember that the money on these cards is not free – you are borrowing it and therefore you need to repay it. If you don’t repay it in full at the end of the month you will also have to pay interest, which means that you will have to pay through the nose in some cases to enjoy the convenience of a credit card. This is why it is important to repay the balance as quickly as possible, and avoid making just minimum repayments at all costs.

One effective way of cutting back on credit card debts is to transfer the debts off your higher interest cards onto a balance transfer card. If you can pay your balances off within a certain time period then you can enjoy an 0% balance transfer card, which offers an interest free period during which time you should repay the combined transferred balances in order to avoid interest charges. If you think it will take longer to repay the debt then you may fare better with a life of balance transfer card, which offers a low rate of interest for the life of the balance.

Willpower is vital in order to avoid spiralling credit card debts, and in order to avoid falling into this debt trap you should avoid the temptation to impulse buy – you may even prefer not to carry your card around with you on a daily basis, instead reserving it for emergency use only. If you have a number of credit cards and want to eliminate the temptation of running up balances on them you should look at closing down all but one account so that you have a card for emergencies but you don’t have a string of cards that could result in huge debt levels if you get carried away.