A friend of mine (who wants to stay anonymous) runs the Asian subsidiary of a large credit card company. The following is what he has highlighted to me over a beer.
What a Credit Card is
A credit card is a form of free short-term borrowing and expensive long-term borrowing. It allows you to buy goods and services without using cash, that is, on credit.
If you cannot pay off your credit card bills each time in one single go then you should only use a pre-paid credit card (which is also a safe thing for Internet payments) or a debit card: If the pre-paid card is empty or if the bank account to which the debit card is assigned is empty, payment will not go through.
When you can use a Credit Card
You can use your card locally and overseas at merchants that display the brand (Mastercard, Visa, etc.) of your credit card. When you make a purchase with a credit card, and if you do not enter the PIN code into the payment terminal, then you have to sign a paper sales slip. The merchant keeps one copy of the sales slip and he gives you another copy for your records. Your card issuer pays the merchant and then collects the sum from you in a bill that totals your purchases for a month.
Once a Payment is Made, You cannot Cancel it Anymore,
When you use your credit card to purchase something from a merchant, the credit card issuer requires you to make your credit card payments for that purchase even if the merchant closes down before you have obtained what you have purchased. This is because once you have entered the PIN code or signed the paper sales slip, the credit card issuer pays the merchant in full.
Understanding the Monthly Statement
The card issuer will send you a monthly statement detailing all the purchases you have made with the card during the month. Check your monthly statement carefully and inform the card issuer promptly if there are any discrepancies or if any clarification is required.
Understanding the fees and charges applicable to credit cards
Annual fee: this is a membership fee which you have to pay for the use of the credit card. Take only free credit cards that come without a membership fee. Note yourself a reminder for the expiry period of the free membership.
Cash advance fee: this is a fee charged for every cash advance obtained by using the credit card. It normally ranges from 3% to 6% of the amount advanced, subject to a minimum amount.
Important: Pay your credit card bills promptly to maintain a good credit record with your banks. Best is to install a successful automatic deduction from your regular bank account.
There is Massive Credit Card fraud Out there. Right under your Nose.
There are thousands of web pages that publish “credit card numbers that work“, see here
Ask yourself: why is your own credit card number not yet there?
So be careful with your own credit card. Treat your credit card like cash.
The following information can save you a fortune, not to speak of the hassle that you have when you notice that your credit card is missing.
Sensitive Credit Card Information
The following is sensitive credit card information and you should never disclose it to anybody, unless needed for making a purchase: credit card number, and three-digit CVV code on the back of the credit card (next to your signature).
The credit card number is the most important piece of information. It is 14 to 19 digits long. The first 6 digits determine the card type and its country of issuance. The last 4 digits are error checking digits. Check out this link: https://www.freeformatter.com/credit-card-number-generator-validator.html
Never allow others to take a photo of your credit card.
Never write the CVV code up anywhere. The CVV code is important for Internet shopping. Store the CVV code in your safe password vault and remove it from your credit card. Scratch it off with a knife or cover it with a fat black felt pen.
Your credit card also comes with a PIN. Never write the PIN up anywhere. Store the PIN in your safe password vault.
The expiry date is an important piece of information, but not for identification of a specific credit card. Most merchants use it for excluding payments with a card that has expired. Some merchants do not, especially in Asia. So you can pay with an expired credit card in Asia, but not in Europe, check out this http://bit.ly/ExpiredCreditCard
What nobody knows: the name on the credit card is not an important information. It is not transmitted during the processing of a payment. Try it next time if you do not believe me. Pay as “Donald Duck”.
Two dangerous things: Internet Purchases and Using a Credit Card in a Foreign Country and/or in a New Restaurant
It is dangerous to use your credit card for shopping at online stores in the Internet. Two rules apply:
Always print the invoice and the payment confirmation page after completing your online purchases and verify the amount billed to you in your monthly statement.
Have one separate dedicated credit card for Internet purchases. Once you detect a fraud with your credit card that you use for Internet purchases, you can cancel it for preventing further damages. The cancellation of your Internet credit card would then not interfere with other (wanted) regular payments that you make from a second credit card that you have registered for subscriptions to road toll services, online newspapers, etc. It is a huge hassle to re-register a new credit card with these suppliers, so better avoid this in the first place.
Use your card wisely. Tips.
Always have at least two credit cards, and – when you are regularly traveling – better three cards, from different card companies (Visa, Mastercard, etc.). Use one and the same credit card always for the same purposes, like a first credit card for Internet purchases (always dangerous), one credit card for travelling, and one-time visits at shady restaurants, and one credit card for subscriptions to memberships or other regular payments to safe merchants.
This has nothing to do with Credit Cards but it is an important rule of life: always have two different banks. That one is a true basic rule of life.
Treat your credit cards like cash. Keep them safe. Check regularly to ensure that your credit card is always in your possession. Sign your cards with permanent ink as soon as they arrive.
Keep a record of your card numbers, their expiration dates, and the phone numbers and addresses of the card issuers in your safe password vault. You will need this information on an urgent basis when you credit card gets stolen. I needed this information so far once in my life time. In France. On a business trip.
Keep an eye on your card during the transaction, always, and get it back as quickly as possible. Please note that a credit card can even be copied if it has chip on it.
Read all details on a paper sales slip before signing or confirmng the transaction.
Draw a line across any blank space for entering money amounts when you sign a paper sales slip.
Cancel incorrect sales slips and tear up cancelled paper sales slips in half if you have signed them before the transaction.
Important: save paper sales slips to compare with billing statements. Check your billing statements promptly when they arrive, especially after each overseas trip. If you notice any discrepancies, call the card issuer immediately.
Inform the card issuer immediately when you change your address. If possible, inform them in advance.
Keep your cards in the same place after use. This way, you would notice immediately if they are lost or stolen.
Have a separate credit card with a lower credit limit for online purposes. And check whether the website of your online shops are safe.
Don’t Sign a Blank Paper Sales slip. Only morons do this.
Don´t lend your Credit Card to Anyone. Please note that a credit card can even be copied if it has chip on it.
Don´t leave your Credit Cards or Paper Sales Slips lying around. The paper sales slips have all the sensitive information that is needed to make a purchase with zour credit card.
Never keep your credit card PIN in the same place as your card. Use your safe password vault.
Never perform online transactions with your credit card on public computers, such as in airport lounges or waiting rooms. Use your own smart phone for that.
Loss or theft of credit cards: What to do
If you discover your credit card is missing, call the credit card issuer immediately. The credit card issuer can temporarily block it until it appears again.
If you discover that your credit card is stolen, make a police report immediately.
In many countries, prior to you notifying the card issuer of the loss or theft of your card, your maximum liability due to un-authorised transactions is limited if you have informed the card issuer of the loss or theft as soon as possible and if you have complied with my above mentioned security tips.
Call to Action. Do these Three Steps Now.
- Install your safe password vault on your smartphone and store your card numbers, their expiration dates, CVV numbers, PINs, and the emergency phone numbers and addresses of the respective card issuers in your safe password vault. This may take a one-time 20 minutes for installing the safe password vault, but then you have it in place. You will need the vault a lot in the future.
- On all credit cards: scratch out the CVV or cover it with a fat black felt pen.
- Label your three credit cards with: “subscriptions”, “Internet/travel/questionable”, and “safe purchases/restaurants”.
Start now. Install your safe password vault on your smartphone.