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Wednesday, March 5, 2014

10 can't miss credit card tips for 2014, courtesy of Bankrate

Here's to 2014 and your New Year's commitment to being a savvier credit card holder. Here are 10 tips for managing a credit card.

1. Pay your bill twice a month.

This is an easy way to keep your credit card balances under control and bills paid on time while helping to boost your credit score. By paying more often, overall balances stay lower, which helps your utilization rate for that card, a key factor in calculating credit scores.
The utilization rate is the percentage of available revolving credit you use -- such as credit cards. It's calculated for each credit card account and for all of them in aggregate. The lower the percentage, the better for your credit score. In fact, FICO found that those with the highest credit scores, above 785, on average used only 7 percent of their available revolving credit.

2. Understand your card's anti-skimming features.

Credit cards come in different flavors, from the traditional card with the magnetic stripe to virtual versions of cards in smartphones. And, they all come with their own security features, some better than others.
The mag-stripe card is the most vulnerable to skimmers, which can pick up the encrypted information on the stripe and use it to counterfeit cards. Cards with EMV (Europay, MasterCard, Visa) chips, or microprocessors, are nearly impossible to clone because the chip encrypts transaction and card data uniquely each time it's used. It's also hard for fraudsters to skim contactless cards or virtual cards uploaded to smartphones because there is no swiping involved in completing a transaction.

3. Know your fraud protections.

Even if your credit card is stolen, skimmed or lost, the federal law has your back. The maximum liability for a lost or stolen credit card is $50 under the Fair Credit Billing Act. If only your credit card account information is stolen -- such as in a data breach -- then your maximum losses are zero. The protections are not the same, or as good, for debit cards. You could have unlimited losses, depending on how long it takes you to report your card lost or stolen.

4. Don't get blindsided by a corporate card.

If your company is giving out corporate cards, make sure to ask about the card policy. Companies can establish corporate credit card accounts based on their own credit rating and issue cards to employees for business expenses. In these cases, the company pays for the charges on the corporate cards and the card issuer will only ask the company for payment.
However, a company can choose to make their employees jointly liable for the charges. Typically, the issuer of the corporate card will require an employee's Social Security number before it will issue a card. Then, the employee is responsible for payment, and any late payment can show up on the employee's personal credit report, hurting his or her credit score.

5. Don't pay for your cash back.

The quickest way to lose the cash that you earned is by paying interest charges on credit card balances that you roll from one month to the next. For example, take a cash-back card that earns 1 percent back with a 16 percent interest rate. If you charge $500 and pay off only $100 of that, you incurred $6.67 in interest and earned only $5 in cash back. That's a lose-lose situation.
The bottom line? Always pay off your entire balance every month to get every cent of your cash back.

6. Take stock of your wallet.

Are you carrying too many credit cards that you don't use? It's time to take stock of your credit cards and decide which ones should stay and which account you should close. Make sure any rewards cards match your spending habits so you get the most back from your most common purchases such as gas or groceries.
If your cards don't fit your purchases, consider opening a new account or asking your current issuer to transfer your account to a new card. Close the card you don't need only after you find another card, so you maintain the same level of available credit to help your credit score. Feel free to dump any store credit cards you never use. They typically don't have high limits, so they won't hurt your available credit as much.

7. Take charge of your credit limit.

Credit card issuers use your credit score to help determine your initial credit limit and any increases or decreases after your card is opened. They systematically review your credit report to see if your creditworthiness has changed and if your limit should be adjusted accordingly. Others will review your limit if you make a late payment. That means you should always keep your credit in tip-top shape.
If you want a bigger limit, simply call your issuer and ask for an increase, if you have a good track record for at least a year.

8. Know what car rental insurance to take.

Many credit cards come with a loss and damage waiver or collision waiver policy for car rentals, which cover the cost of repair or replacement to a damaged or stolen car. But make sure to read the fine print. Many waivers don't include luxury cars, moving vans or trucks, passenger vans or car rentals in foreign countries. Others have rental time restrictions, in case you're renting for the long term. And, credit cards typically don't offer liability coverage for damage, injury or death that you may cause. You may need to purchase that coverage from the car rental company or find out if your personal auto policy covers rental cars.

9. Add an authorized user, not a joint account holder.

Want to help your kid or spouse build credit? Add them as an authorized user, or AU, to your account rather than signing up for a joint credit card. Your child or spouse will benefit right away because their credit report will immediately be populated with the account's history.
This financial relationship also gives you greater control. While you will be the only one responsible for repayment of the debt -- authorized users don't have this legal obligation -- you can end the financial tie without needing the AU's permission. This can be especially helpful if the AU's spending goes wild or there's a separation or divorce between the spouses.

10. Know how to dispute a credit card purchase.

Not happy with a purchase you've made and the retailer won't give you a refund? Under federal law, you can dispute the quality of goods and services for purchases made by a credit card in your home state or within 100 miles of your current billing address.
The purchase must exceed $50 and the consumer must have made a good-faith effort to resolve the issue with the seller first. To withhold payment, send a letter and any supporting documents to your credit card issuer via mail, over the phone or online.

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