Remember when credit cards were for travel, not grocery shopping? Recall the days before debit cards?
We are all using plastic more than ever—for both large and small purchases. And, so are scammers and fraudsters! About 31.8 million U.S. consumers had their credit cards breached in 2014. Last year, the number of U.S. data breaches tracked reached an all-time high of 1,093. (Not all breaches are reported to victims or make the news. To keep up on the latest, go to www.privacyrights.org or www.idtheftcenter.org.)
All of this means we have to look more closely at our credit card and bank statements – and then act promptly when something seems amiss. At that point, the federal Truth in Lending Act and the Fair Credit Billing Act, and the card companies themselves can provide some protection (see the sidebar for details).
Here are 5 easy and painless ways I suggest clients of Personal Money ManagerSM manage their credit and debit card accounts:
1. Simplify. Seniors who use credit cards carry an average of four. That means four statements, four due dates, four minimum payments, four rewards programs to master, and four opportunities to maybe misplace a card. Unburden yourself and your wallet by paring down the number of credit cards to two or three at the most. How to choose? Compare your cards based on the number of years you have had them, the credit limits, interest rates, and any other factor important to you (like rewards). Just the process of evaluating your cards can be an education in itself. If you want to hold on to additional cards, put them in a safe place at home. (And don’t forget about cards you opened years ago and never use, or can’t even find anymore. A free annual credit report (www.annualcreditreport.com) will let you know what’s out there in your name.)
2. Scrutinize your monthly statements. If you opt for paperless statements, it’s easy to ignore notifications from the bank that your statement is available. Remember that it’s up to you to recognize unusual charges. It’s easier to keep on top of your checking account when you insist that your bank provide check images with each bank statement. Look at each image for accuracy and fake checks.
3. Copy and chart your cards. Copy cards front and back. Also create a chart showing the account number, customer service number, when in the month the bill arrives, the typical balance, and how it’s paid (if direct debit—from which account?) Make a similar chart showing direct debits from bank accounts. These are valuable reference tools for you, your power of attorney, and family.
4. Track your spending, starting with matching credit card slips to your statements. See what works best for you for collecting receipts before the monthly statements arrive: A zip bag in your purse to hold receipts as you get them? Labeled envelopes in a desk drawer for each of your credit card accounts? Remember to print receipts from online shopping, too. Check your statements’ accuracy by matching receipts to the statements. You don’t need to keep most receipts past that point, except those for major purchases you might return, or those for tax deductible items.
5. Report financial fraud as you would any other crime. (Only one in five of these crimes is currently reported.) You may need a police report to document and initiate an investigation or put a security freeze on your credit report. Fraud can also be reported to the US Senate Special Committee on Aging’s Fraud Hotline 1-855-303-9470 and the Consumer Financial Protection Bureau 1-855-411-CFPB (2372).
Here to Help:
Federal laws provide protection for credit card and, to a lesser extent, debit card holders. In the case of unauthorized use of your credit card, the Truth in Lending Act limits personal liability to $50 without a time limit to report a card lost or stolen. With debit cards, report a lost or stolen card within two business days to limit personal liability for fraudulent charges up to $50.