Using Credit Responsibly
Smart Spenders know how to use credit responsibly. Here are eight tips to use credit without abusing it (or letting it abuse you).
Smart Spenders don’t run up debt just because they have credit available. They know how much debt they can afford and stay below that amount.
Smart Spenders take time to read each contract and loan agreement before they sign anything. They know how interest, fees, penalties and payments are applied so they don’t get hit by unexpected issues.
Smart Spenders don’t let debts linger, especially when they can be paid off quickly. They aim to pay off credit card balances in full every month or in as few billing cycles as possible. And they check terms to see if loans can be paid off early without a penalty.
Smart Spenders know it’s better not to hide from creditors is there’s ever a challenge paying back debt. They call lenders and creditors to make arrangements when issues arise, requesting a forbearance or temporary adjustment the payment schedule.
Smart Spenders don’t use credit cards as a license to spend. They always comparison shop before spending and shop with a list. So that means not buying on impulse because of flashy sales displays.
Smart Spenders are prompt about reporting lost or stolen cards. And if there’s a potential for identity theft they place fraud alerts with the credit bureaus.
Smart Spenders only give out credit information over the phone if they initiated the call or if they have verified the caller’s identity. Giving out information to the wrong people can lead to identity theft and fraud.
Smart Spenders only enter credit card information on trusted, secure websites. And they never enter credit card information after clicking on an unsolicited email that shows up in their inbox.
Those are just a few ways Smart Spenders use credit so it doesn’t cause problems. For more information on how to be a Smart Spender, visit ConsolidatedCredit.org!
8 ways to use credit wisely to avoid challenges like debt and ID theft.
Using credit – any type of credit, including loans – requires a certain level of financial responsibility to avoid the hassle of challenges like debt problems and identity theft. You need to be able to borrow responsibly in order to maintain stability. If you see that you have bad or risky habits when it comes to using credit, like entering your card information online without thoroughly vetting the website, then you need to adjust your habits BEFORE it turns into an issue.
3 ways to spot ID theft early
Credit cards accounts make you a prime target for identity theft. From data breaches at retailers and skimming devices at gas pumps to email phishing scams and fraudulent websites, there are plenty of ways for a thieves can gain access to your account.
The tips in the video are just some of the steps you can take to prevent ID theft. However, even if you’re careful, there’s no guarantee that you’re 100% protected from ID theft. So you may also take extra steps, like using a credit card with a low limit when you shop online to minimize potential losses if your account does get hacked.
You should also take the following actions to make sure you spot theft as early as possible. The faster you report a theft, the less out-of-pocket losses you are likely to face:
- Review your credit card statements carefully. This is your first line of defense against fraudulent charges. If you see a charge you don’t recognize, investigate to make sure it’s one you made. If not, call your creditor to report the potential theft and see if you can get that charge removed.
- Review a free copy of your credit report once every year. By law you can download a 100% free (no strings attached) credit report through annualcreditreport.com every twelve months. Get your reports each year and review them to make sure you recognize all of the accounts listed and that the balances are not higher than they.
- Set up fraud alerts with your creditors. Make sure your accounts are set up with fraud protection in place. You can set up email alerts or a phone call from your creditor when something is charged that’s outside of your normal spending patterns. Once in place, make sure you don’t ignore notifications, so you can take care of potential fraudulent charges promptly.
More ways to avoid retail shopping traps
Retailers put a lot of effort into getting you to spend as much money as possible. Today’s technology makes it even tougher to avoid spending that doesn’t fit into your budget. In addition to the tips offered in the video, make sure you’re aware of other retail tricks so you can avoid getting pulled in:
- Have a running list of things you need, so you only shop sales that are relevant. This is especially true if you’re signed up for email alerts or have smartphone app alerts set up for certain stores. You’ll be inundated with “exclusive” offers and pop-up sales that can be extremely valuable, but only if it’s an item you actually need. Have your list ready and then shop sales when come up for those kinds of purchases.
- Window shopping should not be a hobby. Walking around storefronts just to see what they have often leads to spending you don’t need to make. Window shopping – particularly with friends – usually leads to overspending on credit. You also want to avoid shopping hungry or tired, as you’re more likely to spend more without comparison shopping or considering whether you really need items.
- Be aware of reward credit card purchase acceleration. Purchase acceleration is where you spend money on a credit card almost solely for the purpose of earning rewards from a credit card. This happens if you have rewards credit cards with tiered point scales or a card that requires you to make a certain number or dollar amount of purchases in a month in order to meet rewards requirements. These cards are fine if you spend that money naturally, but if you’re spending to meet the requirements it’s time to put that card on ice.