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Credit Cards: The Straight Scoop

Need help with your Midlife Finances? 

     Credit cards can help.

     Whenever you make a purchase, it’s automatically recorded on your statement. If you pay for everything possible with a credit card, you’ve also got a record that automatically records what you’re buying — and where you’re doing it. Knowing what you’re spending can help you set up a workable budget —  and follow it. (It’s also an easier way to keep track of medical, moving and business expense deductions for upcoming taxes.)

A FEW CAVEATS

     *Make sure you’re getting something something extra! You should be earning rewards with every dollar you spend. Cash back is a favorite; one of the best as of this writing is Chase Freedom. Not only are they offering a bonus of up to $175 — until March 2015, you can earn up to 5% cash back on up to $1500 in purchases.  (You’ll earn 1% afterwards — a basic for many credit cards.) Some sites, like Amazon, let you automatically apply any earned rewards to current orders.  Here’s a more comprehensive list of some of the best credit cards to offer cashback rewards.

     *Don’t pay an annual fee — unless you’re getting something really good for it. Many cash back cards, including the one mentioned above, don’t charge an annual fee. Airline travel cards, on the other hand, often charge an annual fee (sometimes waived the first year) — but will also give you enough points at the start to purchase a plane ticket or two. There are some offers as of this writing. Here’s a good list to start with.

And finally:

     *If you can’t handle the temptation — don’t use them. Credit cards make it easy to buy now, without planning for sales, or saving up for large purchases. Just because you can do it, doesn’t automatically mean that you should. Right now, at least.

With rare exceptions, if you can’t afford to pay your cards off in full every month, you’re better off waiting until you can.

CREDIT CARD SAFETY

     You’re using credit cards — but are they really safe?

Well, yes…and no.  A number of companies have had their credit card info hacked, includingTarget, TJ Maxx and JC Penney.  (Target, at least, offered free credit checks for a year to customers whose info was compromised.)

On the other hand, situations like this are relatively uncommon. (Whew.) You can minimize your own risk:

*Use a password-protected system like Last Pass for online purchases. It protects your true numbers in a workable system that’s easy to use. (It’s also great for protecting access to e-mail and other password-protected sites.)

Some credit card company issuers offer cardholders a virtual card number for use during online purchases. Just ask.

*Take care not to ‘flash’ your credit card during in-person purchases. Keep the number covered, run it quickly through the reader, and never lay it down on the counter. (Your purse or bag, ditto. A friend made a purchase at Radio Shack, laid his wallet down…and walked away for a moment. By the time he realized his mistake and returned, his wallet was gone.)

*Don’t let your card out of your sight. This will be tougher, since most restaurant employees disappear with your card while finishing up the transaction. (Ironically, the one time our card was hacked at a restaurant, we were at one of the snootiest eating places we ever visited.) If you’re concerned, ask to watch — or handle the process at the cash register yourself.

*Check monthly statements carefully. Make sure your recollections and receipts tally up with the total. Shred any receipts with the full card number printed on them.

*Call before you take a working or vacation trip. The credit card issuer may suspect a scam and freeze your card use, if they don’t know you’re on the road. If you’re headed overseas, a chipped ‘smart card’ or specialty VISA/MasterCard are your best bet. (Find out more here.)

*Beware of skimmers. RFID (Radio Frequency Identification) credit cards are easy to use, because they send data via radio transmissions. That means you can use your card without actually having to swipe it.

Unfortunately, that also makes them easier to ‘skim.’ Crooks can actually scan your RFID cards while they’re still in your purse! Protect yourself better by:

  *storing your cards next to each other

*folding them into a sheet of foil or

*making a foil holder from an old coffee bag  or

*using an RFID-protected wallet. This version, from Sharper Image, uses blocking technology to protect your cards. It’s an attractive leather, too. (Sharper Image is currently offering a 10% discount to new customers, as well.)

SHOULD YOU USE CREDIT CARDS? 

Of course…provided you’re careful. At a glance from your paper or online statement, they’ll tell you where your money is going — and what you’re buying with it. If you pay regularly, they’ll improve your credit. And even better, credit cards can earn you more money while they’re in use.Our family’s two cards (neither charging an annual fee) earn up to $250 extra cash annually. A nice bonus, for an already helpful money tool!

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