8 people you trust with your credit card, but shouldn't

Erica Sandberg, On Wednesday January 26, 2011, 1:00 am EST

It's amazing how often we blindly hand over our credit cards and numbers to so many people and businesses. Why? We trust them! The problem is, however, that sometimes we'd be better off holding back and taking a more discretionary approach. Certain individuals and companies should be off limits. To keep safeguard your credit, avoid giving the following folks unlimited access to your account.

1. Your darling child. Whether you have a PC, smart phone or iPad, chances are high that your kid has become quite the gaming pro. She begs for your password and soon your bill swells. It happens, and the damage can be extreme. In January 2011, a 7-year old in British Columbia was on an iPod and found an app called Touch Pets - Dogs 2. An hour's worth of play ran up $852, which was charged to the credit card her parents had on file with iTunes. "Trust can't come without education and maturity," says Jan Ruskin, spokeswoman for Creative Wealth International, a financial literacy product company. And clearly a child can't be expected to read and understand fine print.

2. Callers investigating a credit card scam. The man on the phone sounds both professional and deadly serious. He's with the police or credit card company, and he says that your account has been compromised . To confirm your identity, he needs you to read off your card's numbers. The catch: He's the thief. "No responsible agency will work this way," says Los Angeles-based security expert Chris McGoey. It's easy to fall for this scam because very often the caller knows a few facts about you. "They'll get a hold of people from a list -- religious, political, etc. The story sounds plausible," says McGoey. To ensure all is well, though, hang up and call the number on the back of your card.

3. Loved ones. You'd think you could rely on your best bud to never do you wrong, right? Well, not necessarily. Sometimes it's those closest to us who abscond with our credit information. A 2010 Identity Fraud Survey Report found at least 13 percent of all identity theft is perpetrated by friends, neighbors and other close acquaintances. Lend a pal your card or leave statements in plain view and you could be exposing yourself to trouble.

4. The hired help. It may save you time to hand over your Home Depot card to a contractor, or give your Visa to the nanny so they can buy supplies, but that's giving strangers way too much access. They might be the most upstanding people in the world, but you should still order your own stuff. The only people who should ever charge on your card besides you are other co-signers and authorized users.

5. Virus protection heroes. Get online and see a warning message that your computer has a virus needing immediate attention? Use extreme caution when purchasing new protection software. "Don't trust anyone who tries to scare you into downloading software to fix your PC that's supposed to have a virus," warns Robert Siciliano McAfee, a consultant and identity theft expert. "This is scareware, and it will mess up your operating system, and your card will be charged more than once."

6. The disappearing waiter. Anytime your plastic is swept away by another person, you have reason for pause. Unfortunately, some restaurant staff may be especially dangerous. "Many skimming networks operate using wait staff," warns Steve Rhode of GetOutOfDebt.org. "They will pay $50 or more for credit card information that can be swiped off your card using a small electronic device that reads the magnetic strip on the card. Skimming only takes two seconds." While you can't always control where they take the card, it's important to check your receipts and statements immediately.

7. The "helpful" debt collector. If you owe money to a collection agency, you might be asked to enter into a payment plan or settlement agreement using your credit card. Don't do it, says Sonya Smith Valentine, attorney and author of "How to Have a Love Affair with Your Credit Report." "If you are working out a deal on past due debt with a debt collector, send a money order," she suggests. "Some debt collectors will charge your card for the whole amount that you owe, not just the amount they agreed to settle the debt for."

8. You. According to Carrie Coghill, director of consumer education for FreeScore.com , the person you might want to be most wary of may be reflected in the mirror. "Even the smartest people do the dumbest things," Coghill says. She cites examples of those who consolidate debts on low interest rate cards, but don't pay attention to the special rate time frame and get hit with super high APRs, and millionaires who overextend themselves because they must have the latest things. So look inward, cardholder: If you can't trust yourself to stay out of debt, purge your wallet of plastic.

While casting suspicious glares at everyone is unnecessary, being careful can prevent common credit problems. Monitor your financial affairs too. "The bottom line is the best deterrent against credit card fraud and abuse is for you to monitor your monthly statements and check your consolidated credit report twice a year," says Rhode.

See related: 9 hot credit card scams to watch out for , New phone phishing scam on the rise , Card thieves 'skimming' pay-at-the-pump customers

• 6 expenses you should never put on a credit card
• How to change your credit card bill's due date
• How different cultures handle credit cards

http://finance.yahoo.com/news/8-people-trust-credit-card-creditcards-1745829924.html?x=0

To Preserve Credit Score, Don't Leave Credit Cards Unused

by Jeremy M. Simon
Wednesday, May 5, 2010

provided by

Dear Credit Score Report,
I have four credit cards. One for work expenses, one for personal expenses, a specific store card and then one other. This other card does not get used and has a zero balance. Does this hurt my credit score to have this credit card with zero activity? Would it hurt my credit score more if I closed this account? -- Beth

More from CreditCards.com: • 10 Credit Card Perks You Didn't Know You Had • High Balance on Just One Card Can Hurt Credit Score • Debit Card Rewards Offerings Grow More Diverse

Hey Beth,
If your primary goal is maintaining your credit score, you should leave that extra card open -- but notunused.

Based on the list of cards in your wallet, I'd guess the card with zero activity is one you keep in case of emergencies. Having an emergency card is a smart move, since that plastic could come in handy when an unexpected event catches you without enough cash. Therefore, unless that extra card is causing legitimate problems -- such as charging you an annual or inactivity fee, causing excessive temptation to spend or posing identity theft concerns -- there probably isn't a good reason to close that account. After all, "a zero balance on a credit card account won't hurt your FICO score," but closing an account could, says Craig Watts, spokesman for FICO (NYSE: FICO - News), creator of the most commonly used credit score.

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If you continue not to use the card, however, the bank may cancel it for you. That's because "eventually the card issuer will close the account due to inactivity," says Watts, since keeping the account open costs the lender money. A look back over recent months confirms that lenders have been very willing to close accounts in an effort to protect their profits. Alternately, the card issuer could "begin demanding that the consumer charge X amount to keep it open," says Gail Cunningham, vice president of public relations at the National Foundation for Credit Counseling.

Regardless of who closes the account, your credit score may fall due to a change in a key credit scoring ratio. "Closing an account causes you to lose the available credit limit associated with it. Your utilization rate, also called your balance-to-limit ratio, will increase as a result of closing the account. That may cause a temporary decline in your credit scores," says Rod Griffin, director of public education for credit bureau Experian. That's an important consideration if you're about to apply for a loan.

To get an idea of how your utilization ratio could be impacted by closing an account, let's say each of your four cards has a credit limit of $1,000, for a combined total of $4,000 in available credit. Let's also say that across those four accounts, you've got a total debt burden of $2,000. Then your unused card gets closed, taking your available credit down to just $3,000. Now, instead of using 50 percent of your credit lines, you're suddenly using about 66 percent of your total available credit. That higher proportion makes you appear to be a riskier borrower, since you're that much closer to maxing out your available credit.

Your credit score should reflect that change, although the actual scoring damage will vary from borrower to borrower. "The FICO score assesses all the information on your credit report. So the score impact from any one action, such as closing an account, will depend on what other information is present on the credit report," Watts says.

Luckily, using that emergency card even semi-regularly could prevent its closure by the bank -- and could also help your credit score in the process. For example, you could charge a recurring subscription fee such as Netflix or a monthly cost such as your cell phone bill to your emergency card. By putting such regular charges on your plastic, you "won't be actually taking on additional debt, but should keep the card alive," the NFCC's Cunningham says. Just be sure you always pay your bills on time and in full, since those two steps are necessary for building good credit. "Keeping the account open, using it to make small purchases and paying the balance in full each month is a good way to maintain your credit scores and might help improve them, especially if you've had recent credit problems," says Griffin.

If you've been a responsible borrower, it's unlikely that an account closure will have much impact. Since the most important steps for good credit involve making on-time payments, not carrying excessive debt and applying for new loans only when necessary, "then closing one card is much less likely to affect your FICO score," says Watts.

Good luck!

-- Jeremy

http://finance.yahoo.com/banking-budgeting/article/109451/dont-leave-credit-cards-unused?mod=bb-creditreports

Most Common Traits of ID Theft Victims

by Jeremy M. Simon
Friday, January 29, 2010

provided by

Wealthy consumers who enjoy leisure activities such as tennis, skiing and international vacations are top targets for identity thieves, according to a new report.

A report released Wednesday by credit bureau Experian shows that fraudsters are on the hunt for the most affluent suburban consumers. Compared to the general population of credit applicants, Experian says these consumers live in and around metropolitan areas, favor leisure activities, have college diplomas or advanced degrees and more often tend to be married.

Affluent are more often victims of ID theft, report shows"The crooks are going where the money is," says Gail Hillebrand, senior attorney with Consumers Union, the nonprofit publisher of Consumer Reports magazine.

More from CreditCards.com: • Choose a Credit Card That Matches Your Life Stage • Frequent Flier Cards Evolve: Complex, But More Rewarding • How and When to Use 'Emergency' Credit Cards

Most Common Traits, Activities

Experian identifies the common activities of those most often victimized by ID theft:

• Tennis
• Politics
• Foreign travel
• Charities/volunteering
• Cultural/arts
• Skiing

Where -- and how -- these consumers live also seems to make them more of a target. "The opportunities to steal discarded documents would be greater in suburban areas," says Linda Sherry, director of national priorities with advocacy group Consumer Action. "More affluent households may have domestic help and service people who may have the opportunity to steal personal info from the home that can be used to acquire credit."

How did Experian identify this group of wealthy victims? The bureau's Fraud and Identity Solutions group -- in conjunction with Experian Marketing Services -- compared credit application data with thousands of individual fraud records between January 2007 and November 2008. It found that three of its 12 demographic groups were the most highly sought-after by identity thieves: "affluent suburbia," "upscale American" and the more middle-class "American diversity" category of consumers.

Experian found that compared with the general population of credit applicants, the consumers most often victimized by fraudsters tend to own more new and luxury vehicles and live in higher-income neighborhoods that contain many more homeowners than renters. Additionally, these borrowers tend to be based in densely populated metropolitan areas and often reside in multifamily homes or condos.

Thieves aren't the only group focusing on wealthy borrowers. "Lenders are obviously targeting some of these demographics as well," with better and more frequent offers of financial goods and services, says Keir Breitenfeld, director of product management for Experian's Fraud and Identity Solutions group. As a result, thieves who target these consumers and steal their information have an easier time getting credit and services in their victims' names. "If you're a fraudster, you want to assume the identity of someone who can go out and get high-value services," Breitenfeld says.

How to Protect Yourself

Consumer advocates, meanwhile, say that if the affluent can be victimized by ID thieves, anyone can. "You can't protect yourself. Even the most affluent suburban households, it's still happening to them," Hillebrand says. She says that banks and other institutions have an obligation to better guard consumer data. "We don't have much control over that as individual consumers. People who receive our data decide how carefully to protect our information," Hillebrand says.

However, Experian says lenders need to strike a balance between guarding consumers and not making them struggle unnecessarily to get approved for credit. If consumers must jump through too many hoops in order to get a loan, Experian says, the bank may end up losing their business. Still, Experian says its report suggests that financial institutions may want to do more to protect certain high-risk borrowers.

But it's not only lenders who need to take steps to guard against identity theft. "If you fall into that category, you may want to consider those services" aimed at preventing ID theft, says Maxine Sweet, Experian's vice president of public education.

Those services include:

• Credit Freezes. Both Experian and Consumers Union say freezes offer benefits, but they can also mean added work for the consumer, such as getting a cell phone or utility service. "You have to be willing to be actively engaged in managing your credit report if you freeze," Sweet says.

• Credit Monitoring. Credit monitoring, meanwhile, offers alerts about credit report activity -- typically for a price. Monitoring offers "piece of mind that every month there has been no activity and if there is activity you get a warning," Sweet says.

Consumers may also decide to fight for more ID theft protection from the government, including more oversight of players in financial system and restrictions on how borrowers' personal data can be collected and how long it can be kept, Hillebrand says.

She points to one of the interests highlighted by Experian's report. "If the people who are getting ripped off are interested in politics, they should get politically active," she says.

http://finance.yahoo.com/family-home/article/108711/most-common-traits-of-id-theft-victims