Essential Strategies to Prevent Credit Card Hacks and Misuse
It’s hard to imagine getting through life without credit cards, but even with all the precautions, credit card hacks are still a real threat.
Want to Keep Your Money Safe? Here Are Some Tips!
Understanding the different scams out there is just as important as taking precautions. So, let’s dive into some common credit card hacks and how to steer clear of them.
Be Cautious with Welcome Bonuses
Credit cards often lure you in with enticing welcome bonuses, which can lead some folks to apply for multiple cards just to snag those perks. This practice, known as “churning,” can backfire.
Credit card companies are savvy; they might cut your cash back benefits, shut down your accounts, or even deny future applications if they suspect you’re trying to game the system.
Plus, if you close a card within a year of getting it, you could lose that bonus altogether.
Watch Out for Gift Cards
Buying gift cards can be a bit of a minefield.
Sometimes, when you purchase a gift card from a store that offers bonus points, it counts as a regular purchase, and you get those rewards.
However, if you do this too often to rack up points, your credit card issuer might see it as manipulative behavior, which could lead to losing your rewards or even having your account closed.
Plus, using gift cards usually means you miss out on the purchase protections that come with many credit cards.
Think Twice About Prepaid Cards
Using prepaid gift cards to earn rewards might sound like a clever strategy, especially if you plan to use them to pay off your credit card bill.
But be careful! These transactions are often treated as cash advances, which can come with fees and interest that wipe out any rewards you thought you’d earned.
Payment Apps: The Hidden Costs
Apps like Venmo, PayPal, and CashApp let you link your credit card for easy payments, which seems like a great way to rack up rewards.
However, these services typically charge about 3% for each credit card transaction, which can quickly eat away at the rewards you earn.
Plus, your bank might classify these as cash advances, meaning no rewards and extra fees that hit your wallet hard.
The 15/3 Strategy: Is It Worth It?
You might have heard of the 15/3 strategy, where you pay your credit card bill twice a month—half 15 days before the due date and the rest three days before.
While many think this helps boost their credit score by making more on-time payments, that’s a bit of a myth.
Credit card companies usually report just one payment per month, so this method doesn’t necessarily improve your score as much as you might hope.
Still, it can help lower your credit utilization, but you could achieve similar results with just one payment each month.
What Happens If You Don’t Play It Smart?
Impact on Your Credit Score
If you plan to apply for a loan, lenders will look closely at your credit score, which considers how much you’ve borrowed, how many credit applications you’ve submitted, and your payment history.
Having too many inquiries (like applying for multiple credit cards at once) or missing payments can really drag your score down.
By the way, if you want to check out your credit score to track your progress, make sure to have access to your annual credit score right here!
Overspending Woes
To earn those enticing travel rewards, many credit cards require you to hit a spending threshold—often between $2,000 and $3,000 in the first few months.
This can lead to overspending, especially if you’ve opened several cards at once.
Remember, if you open two cards, you might need to spend $6,000 in just a few months to earn those rewards.
Risk of Falling into Debt
As with any financial tool, it’s crucial to understand the terms and conditions of your credit card before signing up.
Keep track of your card details, know when your payments are due, and be aware of any annual fees.
If you found this information helpful, check out our article on how to choose the best cashback credit card. It’ll give you more insights into making smart credit decisions!
