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How to Use Credit Cards Without Scamming Your Bank

How to Use Credit Cards – Credit cards can be a great way to build credit and get your feet wet with personal finance. But like all things, they come with risks. When you use a credit card to spend money on things that you’ll likely charge back if you don’t get cash back, you’re taking on more risk than using a debit card — even if the balances are smaller. The key is not to overdo it and put yourself in an expensive habit. If that sounds like you, read on for helpful resources and tips on how not to use a credit card scam.

TABLE OF CONTENTS

Know the Different Types of Credit Card Scams

Not all credit card scams are created equally. There’s a difference between getting cash back on a credit card and being scammed out of money. The former happens when you go over your limit and are denied payment, while the latter happens when you don’t put enough money down on a card and get charged interest. Here are some common types of credit card scam: Debt Consolidation Scam – Many banks and credit unions will provide financing for consumers who are trying to pay off old credit card debt. The scammer will get a load of cash from the bank and promise to pay off your old credit card debt in exchange for your new credit card number. Once you’re on the phone with the representative, you’ll sign paperwork that looks exactly like a loan agreement. Don’t fall for it! – Many banks and credit unions will provide financing for consumers who are trying to pay off old credit card debt. The scammer will get a load of cash from the bank and promise to pay off your old credit card debt in exchange for your new credit card number. Once you’re on the phone with the representative, you’ll sign paperwork that looks exactly like a loan agreement. Don’t fall for it! Debt Payments Scam – What may first seem like a legitimate way to repay some of your credit card debt quickly turns into a money-making scheme. Make sure you know the terms and conditions of all your credit cards well. Some companies will contact you monthly to remind you of your upcoming payment due dates. Others will send you automated phone calls with random messages and requests for money. A few months into this scam, you’ll realize there’s no way you can pay all your debt and still survive on your own. The callers may even have your name, address, and other personal information. Don’t give them money. – What may first seem like a legitimate way to repay some of your credit card debt quickly turns into a money-making scheme. Make sure you know the terms and conditions of all your credit cards well. Some companies will contact you monthly to remind you of your upcoming payment due dates. Others will send you automated phone calls with random messages and requests for money. A few months into this scam, you’ll realize there’s no way you can pay all your debt and still survive on your own. The callers may even have your name, address, and other personal information. Don’t give them money. Debt Collection Scam – Scammers have found new and creative ways to contact you in an effort to collect on credit card debts. They’ll call you on a regular basis, usually once a month or so, and make fake promises about paying your bill. They might also send you emails with the same subject line. If you see a pattern, call the company and ask them to stop.

Know Your Limits and Interest Policies

When you get your first credit card, it comes with special terms and conditions that you’ll have to read carefully. Make sure you know your credit card company’s rules as they pertain to how often you can call in and ask for additional offers, how much interest you can charge, and what other terms may apply. Some credit cards also include an annual fee, which you’ll have to pay before you can start the card. Always read the fine print and ask questions until you know the answers.

Don’t Be a Boring Consumer

You should always try to purchase things that you think you need, not things that you just want to show off to your friends. This means having a budget in place and prioritizing what you want to buy over what you think you need. Don’t get me wrong, wearing those expensive shoes you saw in the catalog isn’t a bad idea. But if you have the money, you should use it on something more vital — like food or rent — to show your host that you have benefits too.

Always Have Cash on You

If you’re using a credit card, make sure you have cash on you at all times. Credit card companies ask this so you don’t steal money out of the account. And it’s a good idea to keep a small amount of money in your pocket or in a healthy savings account. This way, you won’t be tempted to spend it all at once. When you’re out, keep your hands on cash so you can pay for things quickly and easily. If possible, avoid using a debit card. They take longer to process and have higher fees, which can lead to a higher overall cost of using a card.

Report Debt Responsibly

If you have a credit card debt, get it paid off as soon as possible. If you don’t, you may end up having to pay interest on your credit card bill even when you don’t owe it. This is called debt collection and it’s a scam.

Check Out the Credit Card Company’s Reputation

If you have any concerns about a certain credit card company, check out the reputation score they have on CreditCards.com. This will give you a better idea of how they’re doing as far as customer service is concerned.

Conclusion

The best way to avoid using a credit card scam is to know the difference between getting cash back on a credit card and being scammed out of money. Credit cards are a great tool when used correctly. But, like anything, they come with risks. The key to avoiding credit card scams is to know the difference between getting cash back on a credit card and being scammed out of money.

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