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What are the risks of using credit cards and how you can deter it?

There are 101 reasons to get a credit card, but also 101 reasons to hesitate. Of those 101, if you choose to get yourself a debit card instead, you give yourself one extra headache: when identity and credit card fraud thieves get at your debit cards, you lose your hard-earned cash from it. More than that, a debit card actually has less protection than a credit card itself. So we’ll explore the pros and cons of using credit and debit cards and identify the risks of being a credit card user.

Overspending

For a credit card user who can’t help but overspend, it is always possible to make a request for a credit limit increase. For the debit card user, if you’ve overspent, you’ll probably have nothing left in your debit card account. The credit card user may find himself in debt, while the debit card user may find himself all out of cash.

Annual Fees

Most credit cards have annual fees. Some credit cards will waive annual fees, but only if the user will spend a certain amount of cash. Oftentimes, this will be a large amount of money since you are borrowing more. Debit cards, on the other hand, have more reasonable, even minimum annual fees but you are using your own money.

Interest Rates

Credit card interest rates are generally reasonable for customers with good credit. For those with bad credit, they may find that their interest rates are higher, even on secured credit cards. Debit cards do not have interest rates, as it is your cash in the account.

Risk for Credit Scams

Since both are run by the same credit card networks, both are at risk for credit scams and credit card fraud. A credit card has a better advantage because once reported, charges and transactions incurred through fraud can be reversed. Not only that, a credit card user is liable for only up to $50 of the charges. The credit card company can then work with him in reversing the fraudulent charges, he will only be held liable for a maximum of $50 for each card. But the victim can still expect to spend a sizable sum cleaning up the mess a thief leaves, not to mention the dent it may put in their credit score.

For debit card users, once stolen, they may never see their money again. There are debit card products that offer insurance for identity theft, but for most, it’s a tedious process to try and recover the stolen money. Oftentimes, the user just gives up because the process takes too long.

Either way, both a debit card and a credit card has its innate risks with its use. Both are vulnerable to identity theft attacks and scams, and both can be cause for financial ruin when an identity theft gets out of hand. However, one thing can solve the risks for both types of financial products: get credit monitoring.

Getting credit monitoring will allow you to discover a fraud attack on your accounts as they happen, and help you to deal with these, too. Knowing that your accounts are being used by somebody unscrupulous will help you to freeze your accounts and nip the theft right in the bud. Don’t wait for your credit check before finding out that you’ve been scammed! Knowing that you could be an ID theft victim anytime, any day is more than enough reason for you to monitor your credit. You don’t need any more reasons to monitor your credit other than that fact.

How to protect yourself from credit card fraud:

1. Don’t fall for phishing scams – Meaning, don’t open email from people you don’t know, and don’t click links from friends, unless they’re from websites you recognize. If the links lead to web pages asking for your info, close the tab or window immediately.

2. Don’t give out your SSN to just about anyone – Whether online or in real life, keep your SSN to yourself and to the institutions that require it, and keep your SS Card to yourself as much as possible.

3. Shred all your documents before you throw them into the trash – Trash theft is one major source of credit card and identity theft information. Keeping your documents shredded discourages trash thieves from being able to get and use your identity info.

4. Collect your mail as promptly as you can –This way, nobody can take a look at the credit card offers or pre-approved cards that come in your mail.

5. Be wary of online dates and even real-world dates – Some of the worst cases of identity theft and credit card fraud were committed by the romantic interests of its victims.

A credit card may come with a lot of risks, including credit card fraud, but it is no reason for you to shy away from getting one. Just gets credit monitoring and you can prevent it.

About Author: Amy Johnson is an active blogger who is fond of sharing interesting finance related articles to encourage people to manage and protect their finances. Follow her and know how to discover credit card fraud.

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