1. Only use one credit card for the majority of your spending. I do like having a few (3 is the sweet spot) credit cards just in case you lose one, or for certain privileges and to have a higher credit limit (since credit utilization impacts your credit score).
When it comes to shopping for a credit card, I’ve always used the research on NerdWallet.com-they do a good job of comparing your options depending on what’s important to you. Some cards are better for foreign travel (think Chase Sapphire which has no foreign transaction fees, some cards have better tracking options-Discover it® is my favorite for categorizing your spending AND providing you with Identity Theft Protection (I use this personally and have my kids on my plan, it’s $15 a month and in this day and age where many of the companies we use and love have been hacked it’s a must to protect your identity).
If you want to have identity theft protection you can also check out LifeLock. Here is a comparison: https://www.security.org/identity-theft/lifelock-vs-discover/
You can also choose to "Freeze your Credit" so no one can open a loan/credit in your name (including YOU), bear in mind you need to do this with all 3 credit bureaus: Experian, Equifax and TransUnion. It can be a time consuming process and you need to unfreeze it if you ever need a loan/to finance a purchase, etc.
2. Set your credit cards payments on “Automatic in full” on the due date. This goes without saying but it’s one of the best kept secrets to prevent paying 29.9% APR on your credit card purchases. In an environment where banks pay us 0.01% to keep our money in a savings account, credit card companies still charge a pretty penny if you don’t pay off that statement balance in full. Tread lightly.
3. You typically have 60 days to report a fraudulent transaction on your credit card. This means you MUST review your credit card bill at least once a month to make sure there are no unrecognized transactions. As of 2020 there have been some 459 thousand cases of fraud and identity theft. Prevention is the best medicine! Early detection is the next best thing.
4. In order to have a clear picture of your finances at your fingerprints use an aggregator site-we use eMoney for our planning software but I love the ability to link all your financial accounts to one wealth site where you can see all your Assets, Liabilities, your Financial Net Worth (all that you own minus all that you owe). This is a key metric to know how you’re doing financially and track your progress over time. Typically you graduate from school with a Negative Net Worth (because you only have debt and no assets) but as you go through your career and we build up your assets (stocks, bonds, real estate, etc) your Assets outweigh your Liabilities.
5. Last but not least, check your credit report and credit score on the regular. It’s free to check your credit report and you can make sure all open accounts are indeed yours and keep track of your credit score. Your credit score impacts your financial life (from the cost of your house and auto insurance to your % on all financing from your mortgage to business loans, etc). It pays to monitor it as another financial health metric.
Sources:
https://www.annualcreditreport.com/index.action
https://mint.intuit.com/blog/planning/credit-card-fraud-statistics/
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual.