Credit Card Debt Management

What does a credit card thief do when all the finer tricks of the trade have been uncovered? Invent new ones! Without condoning this line of income-making, you’ve got to give the thieves an “A” for creativity … or maybe not. It probably depends on whether you’ve ever been a victim of credit card theft.

Banks have become wise to the standard trick thieves pull as soon as they get a credit card. It might be small, random gas purchases or it might be a penny charge. These have been well-established as telltale signs of credit card theft, as it enables thieves to determine whether or not a card is still active. This is important because active credit cards sell for higher values on the black market, according to CNET News.

But now, thieves have upped their game. To determine whether a newly stolen card is still active, thieves have taken to making small charitable donations with the card. If it’s rejected, then they’ll know it’s going to sell for less on the black market. Banks and consumers, meanwhile, are less likely to pick up on the fraud quickly because charitable donations are quite normal. A consumer might assume a spouse made the donation and might not even find out about it until the thank you note arrives in the mail.

The best line of defense - sign up for identity theft protection and credit monitoring, or check your credit card statements yourself every week or so. This is easy enough to do, as most companies provide convenient online account access. A credit monitoring company is more thorough because it can spot when your name has been used to open accounts you didn’t even know existed. It’s important to be proactive in these matters because thieves won’t be “generous” for long. In no time, they’ll have a new set of golf clubs, a mani-pedi and tickets on a world-class cruise — all courtesy of you and your incredible “generosity.”

Here’s a novel idea - use your credit card rewards points to directly pay off your student loans. To my knowledge, Citi is the only company offering this service, which is part of its Thank You Rewards Network. Of course, a person could take the cashback rewards offered by any other credit card company and apply it toward student loans, but this seems better because it will make a person pay off the loan.

It is a perfect solution for those who lack self-discipline or are merely forgetful, like myself. You can use a Citi credit card to buy groceries, gas, Expedia.com travel packages or merchandise from a large array of participating merchants. Then, you get up to five rewards points for every dollar spent, a generous offer that lasts only 12 to 24 months after card initiation, with one point per dollar thereafter. Those rewards translate to a penny per point toward student loans. My understanding is that Citi sends you a check made out to the lender and you are then responsible for mailing it to the lender. 100,000 points equals $1,000.

Citi’s Thank You Rewards Network has come under fire from some critics for what they view as stingy rewards, but you can’t please all the people all the time. Hustlerama has a great post on Citi’s Rewards Network and the best way to utilize it, including paying off student loans. From my perspective, this seems like a smart way to buy what you need to purchase anyway (groceries and gas) while still socking away money to pay down debt. Of course, as with any rewards program, this isn’t license to a shopping free-for-all in the name of debt reduction. And of course, paying off the bill each month is the smartest thing you can do. Otherwise, you’re just shooting yourself in the foot. But for savvy consumers or even those trying to restore good credit, this is a fine example of financial multi-tasking.

I don’t know about you, but my Christmas gift list is fairly complete. When you know by early November what you are getting nearly everyone, it lifts a lot of pressure and helps ensure that you put in enough thought to get something they really like. After all, nobody really likes those last-minute buys like the fake putting greens they sell in the department stores, right? That’s why there are always plenty left in stock on Christmas Eve - and trust me, I would know. My decision to shop early is really turning over a brand new leaf.

Despite doomsayers’ predictions, the New York Daily News reports that holiday shoppers are expected to spend nearly four percent more this year than last year. However, there will be a slight increase in the number of Internet shoppers at 30 percent, and all shoppers are expected to buy more practical gifts. The tightened economy has had an effect on the nation’s mentality.

The Daily News also points out some important considerations for holiday shoppers, including the following:

Generally speaking, you shouldn’t be charged until an item is shipped. Visa and MasterCard prohibit merchants from charging consumers for items in advance of shipping. American Express allows cardholders to dispute charges on their billing statements for items they haven’t received.

For early holiday shoppers, the article recommends double-checking the store’s return policy. Sometimes 30 days is the return period limit, regardless of whether it was bought as a gift two months in advance. Early shoppers make up more than 40 percent of all shoppers, perhaps because early shopping and planning is one strategy to keep your gift budget from escalating out of control. In his debt management blog, Jason Giacchino also offers some excellent tips to keep spending in check this season. Maybe by utilizing these strategies, you’ll have a little more for the Salvation Army bucket when you pass by.