Want to brush up on credit best practices and keep your credit card debt in check? Here are 10 tips for managing your plastic in 2016.
1. Make the switch to EMV
Card issuers have been rolling out EMV (Europay, MasterCard and Visa) chip cards to comply with the deadline for new rules and standards on fraud liability that went into effect in October.
These new cards contain a computer chip, making it more difficult for fraudsters to counterfeit. You'll see merchants and financial institutions adding new in-store technology to comply. Overall, it means better protection against fraud.
If you haven't yet received your new chip card, call your issuer and ask when you'll be receiving it. The longer you continue using the old magnetic strip, the more vulnerable you are to fraud.
2. Be vigilant about fraud
Even if you've already received your EMV chip card, it's still important to be careful when using your credit card and to be especially proactive about fraud. Many retailers have made the shift to EMV readers after the liability for card fraud shifted to them in October 2015. But numerous self-service payment terminals are still a target of fraudsters.
For example, self-service gas pumps aren't required to have EMV card-reading devices until October 2016 for MasterCard and October 2017 for Visa. That leaves an opening for skimmers -- devices that can steal your credit card data.
3. Freeze your credit
Placing a freeze on your credit makes things a lot more difficult for identity theft. Creditors typically want to see your credit report before extending credit. And if there's a freeze on it, they won't be able to see your file. Therefore, they won't approve credit, according to the Federal Trade Commission. It won't affect your credit standing at all.
You can place a freeze by contacting each of the 3 major credit bureaus:
- Equifax: (800) 349-9960.
- Experian: (888) 397‑3742.
- TransUnion: (888) 909-8872.
You'll need to provide your name, address, date of birth, Social Security number and other personal information. Expect to pay $5 to $10 per bureau, depending on where you live, the FTC says.
4. Pull your credit report and statements
Data breaches are on the rise. In 2014, nearly 20% of American households suffered a data breach, according to a report from the National Cyber Security Alliance and ESET, an antivirus and security software firm. That makes it very important to closely monitor your credit reports and statements for signs of fraud.
To pull your free credit report, visit myBankrate.
5. Get a family education on best practices
Credit card myths just won't die. According to a recent Bankrate survey, 51% of Americans wrongfully believe that having accounts with high balances helps a credit score as long as those accounts are paid on time.
That myth and others provide a great example of why it's important that the entire family gets an education on responsible credit card use.
It also pays to create a plan for when and where to use your credit cards. For instance, certain cards offer better perks at grocery and home improvement stores.
To find the best credit card offers, go to Bankrate.com.
6. Start paying off your credit card debt
It's one of the most effective ways to bump up your credit score. The "amounts owed" category contributes to 30% of your FICO score's calculation, according to MyFico.com.
Start by prioritizing your credit card payments, making larger payments on the card with the highest annual percentage rate. You also might want to consider opening a balance-transfer credit card, which allows you to move expensive debt over to a new card, with a low -- often 0% -- APR for a set time period. Just make sure to read the offer carefully.
7. Decide on a rewards card
There's no single "best" rewards card on the market. It all depends on your lifestyle and what you need.
Are you a frequent flier? A travel rewards card might be best. Are you a big spender? A cash-back card might suit you better.
Either way, these cards are best for those who pay off their balance in full every month. Otherwise, the high interest rate typical of these cards can eat up all of your rewards. Find the best credit card for you with this calculator.
8. Rethink an annual fee card
The ultimate value of cards that have an annual fee depends on your lifestyle and whether you'll spend enough to make up for the fee. If you're a really big spender, you may benefit from an annual fee card that offers a higher percentage in cash-back rewards. Or, if you travel often, you might be interested in a cobranded card with your favorite airline that offers frequent flier perks as well as lounge access, free upgrades and free checked bags.
It helps to crunch the numbers. Bankrate's annual fee calculator can help you decide whether the fees are worth it.
9. Be buddies with your card issuer
Being a great customer in your card issuer's eyes -- making payments on time and using the card regularly -- has its perks.
If you have an annual fee card, ask the issuer to waive the fee for a year. Want a higher credit limit or a lower interest rate? Give them a call. It's common for card issuers to get these kinds of requests, and while they may turn you down, it doesn't hurt to ask.
It's true that card issuers are more likely to approve these requests for their model customers. But even if you aren't the best card user, it can be beneficial to call and chat with the issuer about your needs. If you can't afford an annual fee card, they may be able to move you to a fee-free version of the card.
10. Learn about other card benefits
Your credit card may offer a lot more perks than you think. Alongside rewards, many cards offer ancillary benefits.
You might find your card offers rental car insurance, trip cancellation insurance, purchase protection, price protection and even extended warranties.
These benefits can come in handy when you're shopping or renting a car for vacation. Just make sure you read the fine print on the benefits. Rental car insurance on some cards may not extend to certain types of vehicles, such as premium cars or vans.
Compare ancillary benefits when shopping around for a credit card. Read through each card's terms and conditions to understand what you're entitled to, then decide on the card that best fits your lifestyle.