Debt Management


Money-back rewards are issued by bank card corporations to get shoppers to make use of their plastic extra usually to earn cash-related perks and advantages.

Make no mistake, shoppers will not be solely OK with cash-back rewards promotions, they really love them. Try this information from a current examine on cash-back playing cards by CreditCards.com:

  • 57% of U.S. adults personal not less than one cash-rewards bank card.
  • Of all rewards card holders, 75% personal a cash-back bank card.
  • Money-back-rewards bank cards are far and away the most well-liked type of rewards playing cards, with 43% of survey respondents popping money again playing cards on the highest of their record, adopted by fuel/retail); airline/resort (13%) and normal journey (12%).
  • 52% of rewards credit-card holders have redeemed money again rewards within the yr previous the discharge of the CreditCards.com examine (late 2017 to late 2018.)
  • 22% of rewards card house owners haven't redeemed any money in any respect utilizing their playing cards.

What precisely makes cash-back rewards playing cards so fashionable? The plain reply is money – however there's way more to the difficulty of cash-back rewards playing cards. Much more.

Right here's the thin.

What Are Money-Again Credit score Playing cards?

Money-back rewards playing cards are supplied by bank card corporations to shoppers, who earn cash-back rewards after they make purchases with their playing cards. The time period "money again" is outlined as the proportion of a bank card buy returned again to the cardholder, within the type of a money reward.

Listed here are 5 fascinating issues to learn about cash-back playing cards:

  • With cash-back rewards, a share of the cash spent on a purchase order is returned to the shoppers in user-friendly methods, like deposits into financial institution checking accounts or present playing cards.
  • The IRS doesn’t deem cash-back proceeds as taxable, so that you're getting the money again on a tax-free foundation.
  • Money-back rewards develop increased when card shoppers make the most of reductions and specials promoted on card firm web sites and cell apps, the place cash-back payouts are returned as a better share of the acquisition, relative to common card purchases.
  • Proportion-wise, bank card cash-back packages are often restricted to 1% rewards on the low-end and 5% on the high-end.
  • Money-back rewards include no annual charges, and sometimes include incentivized sign-up bonuses of $100 or extra to get you to join the cardboard.

Money-back rewards playing cards supply shoppers an fascinating proposition.

As an alternative of utilizing money to make a purchase order, which doesn't set off any form of cash-back return deal, shoppers can use their bank cards to purchase the issues they’d purchase anyway, like groceries, gasoline, and golf golf equipment, and earn money again within the course of.

Evaluate money rewards to the inherent limitations of journey rewards or fuel station rewards packages, that are restricted to the industries they provide. Money rewards, however, will be redeemed for almost any form of buy, giving card shoppers extra latitude with their cash-back rewards packages.

For card corporations, cash-back packages unleash the spending energy of the good American shopper, which places more money, satirically, into the pockets of bank card corporations.

All the main bank card corporations, together with MasterCard, Visa, Uncover and American Specific, supply cash-back rewards packages, each adhering to their very own insurance policies and practices. Direct card suppliers, like large banks (i.e., Wells Fargo, Citi and others) and a few big-box retailers, like Costco, are extremely aggressive within the cash-back rewards packages today.

Take Costco, and its Costco Wherever Visa Card by Citi. With it, card shoppers can earn 4% money again on gasoline purchases of as much as $7,000 yearly, or get 3% on eating and journey purchases. Costco customers may get 2% money again buying on the retail large, both at a bodily retailer, on-line or by way of cell.

Easy methods to Redeem Money Rewards

Bank card corporations make it straightforward to redeem bank card money rewards, utilizing the identical monetary instruments that consumes are accustomed to utilizing, as follows:

Financial institution direct deposit

Card shoppers can have their money rewards deposited straightaway into their checking or financial savings accounts. Minimal deposit accounts might fluctuate, so it's a good suggestion to test together with your card supplier on their insurance policies on transmitting money again rewards in your checking account.

For instance, Blue Money Most popular Card from American Specific Card will ship you a deposit cost when your money again quantity hits $25.

Bank card stability discount

Card customers may have money rewards despatched again to their bank card stability, including to the amount of cash obtainable on their plastic.

Reward playing cards

Card clients may have their cash-back rewards within the type of present playing cards, as soon as a sure minimal amount of money again rewards have been gathered.

Charitable giving

Some card suppliers will ship you money again cash to the charity of your alternative. Uncover It Money Again is an efficient instance of a bank card supplier redeeming money to a choose charity, with no minimal quantity required.

Money-Again Rewards Suggestions

The very best methods to make use of money again rewards packages begin with realizing the foundations particular to your bank card, and utilizing them in good methods.

1. Get a bonus

Ask your card supplier if there are sign-up bonuses connected to their cash-back card packages. Some card suppliers pay as much as $250 in such bonuses.

2. Be careful for the advantageous print

Bank card corporations are notorious for his or her contract legalize, and for altering card insurance policies with out going out of their strategy to let shoppers know they're doing so. (Once more, the information is often discovered within the advantageous print.)

But if a card supplier makes a change in a cash-back reward program, resembling decrease cash-back quantities, you'll need to learn about it. Thus, any time you get a discover out of your card supplier within the mail, give it an intensive evaluation to be sure you're heading in the right direction together with your cash-back program.

3. Know your quantity

As a rule of thumb, deal with getting a money again rewards card that not less than pays 1.5% to 2% in cash-back rewards (1% appears to face because the trade minimal). Many playing cards do higher with cash-back quantities, however don't waste your time on any card that pays lower than 1.5%. There are simply too many higher offers on the market.

4. Benefit from your spending habits

To maximise your cash-back bank card expertise, go for a bank card that pays essentially the most in money again rewards for the purchases you're almost definitely to make.

For instance, in the event you're on the street lots, get a cash-back rewards card that will get you a better share of cash again whenever you buy gasoline. Or, in the event you're a dad or mum with a giant household, go for a card that pays 5% or extra in money again rewards on the grocery retailer.

5. Pay your payments on time

This final tip is extra of a warning – be sure you pay your bank card invoice on time every month when utilizing cash-back rewards playing cards. In spite of everything, you'll be utilizing your cash-back card increasingly more to earn money again rewards, and your month-to-month invoice will probably get increased.

Keep forward of any late cost charges, rate of interest hikes and credit score rating issues by paying your cash-back bank card invoice on time each month – and pay greater than the minimal stability.

At a time when more and more financial consumers are turning their backs on cash in favor of credit and debit cards, the risk of credit card fraud is higher than ever.

In fact, 47% of U.S. adults have reported being victimized by a fraudulent purchase using their credit or debit card.

Additionally, credit card fraud was cited by Experian (EXPGY) as the most common form of personal financial fraud.

Yet Americans don't seem to be doing enough to protect themselves against credit card scams.

For example, while 47% of adult Americans have experienced a fraudulent purchase using their plastic, only 14% of that number opted to freeze their credita necessary step when you're the victim of card fraud.

Clearly, consumers have much work to do to better protect themselves from credit card scams. Let's take a look at the problem, and lay out a battle plan to keep card fraudsters at bay.

Types of Credit Card Scams

Increasingly, cash is becoming an antiquated method of payment, and the use of credit and debit cards – whether in physical or digital forms – are on the rise.

A 2017 survey shows that 77% of U.S. adults say they'll use a credit card, either in physical or digital form, to pay for goods and services. Only 12% chose cash.

Yet that's exactly why and where fraudsters see an opportunity for credit and debit card fraud – more consumers are using cards to pay, and financial fraud artists know it. More and more, card criminals are acting on their impulses and engaging in card fraud.

Here are 10 increasingly common ways you could be victimized by credit and debit card fraud:

  • A thief digs through your trash, finds discarded receipts, steals your account number, and racks up thousands of dollars in fraudulent charges.
  • An unscrupulous waiter copies down your credit card number away from prying eyes, and uses it to finance a Caribbean vacation, and you foot the bill.
  • An identity thief lures you to a fraudulent website, which obtains your card under false pretenses, and uses your credit card to commit financial fraud.
  • A technologically-savvy fraudster hacks into your smartphone, and steals for your credit card information.
  • An email-based phishing campaign can lure inattentive card customers to click on a bogus web link, which actually scoops up the consumer's personal financial data, including card numbers, and makes off with the data.
  • The use of malware and spyware could separate you from your credit card – and put your card number squarely in the hands of a credit card data thief. Malware and spyware can not only spy on your internet habits, including purchases made using credit and debit cards, it can also take advantage of older browsers and operating systems to steal personal data.
  • Theft by phone or email can happen, often to older cardholders who aren't as savvy to the ways of today's sophisticated credit card fraudsters as younger, more tech-pervasive cardholders. Here, credit card thieves purport to be from a consumer's financial institution asking to confirm your card account data after a bogus data breach, or under the guise of "updating our records."
  • A data hacker successfully busts into your financial institution's data system (this has happened to JP Morgan Chase
    (JPM) – Get Report and Equifax
    (EFX) – Get Report , among others) and makes off with your credit or debit card data. Financial services companies are generally doing a better job protecting user data, but hacks and breaches keep occurring – putting your card data at risk.
  • A relatively common, but under-reported form of credit card fraud is the simple act of losing your phone or your physical credit, and is found and used by a stranger.
  • You fall victim to what anti-fraud investigators call "account takeover". This happens when a credit or debit card consumers unwittingly provides his or her personal data to a stranger, like a home address or a birthdate, which smart card scammers can use to gain a new credit card.

Credit Card Scams Vs. Identity Theft

While credit card fraud and identity theft do share certain similarities, they have their fair share of differences, too.

Those differences are worth knowing if you want to build a solid defense against credit card scams. Here's what you need to know:

Credit Card Fraud Is Structurally Different

There is a different (and larger) level that separates credit card scams and identity theft. Credit card fraud can be extremely narrow in scope, limited to something as simple as the direct theft of an actual credit or debit card.

Identity theft, on the other hand, is much more widespread and multi-layered. It can include multiple pieces of your data (like a birthdate, a utility bill, and your Social Security card, for example,) which can be pieced together by an experienced card fraudster to steal your credit card data.

Differences in Financial Services Firms "Fixes"

Federal law limits a consumer's liability for credit card fraud to $50. If you report the loss before your credit card is used, the Fair Credit Billing Act says you are not responsible for any charges you didn't authorize. 

With identity theft, card losses are harder to quantify, with multiple firms and entities involved (think your cell phone provider, the U.S. government and your card provider, when your phone, your Social Security number, and your credit card are compromised.)

In that scenario, reimbursements tend to get ensnared in red tape, with repayment taking months or even years.

Harsher Outcomes

With credit card fraud, loss is usually contained to a stolen credit card number. With identity fraud, a scammer can more easily assume a person's identity, and do all sorts of financial damage that can take years to untangle.

How To Prevent Credit Card Scams

Credit card scammers are only growing bolder and are operating in larger numbers. With hundreds of millions of credit card transactions taking place each day, the number of potential credit card victims is abundant

To fight back, take these action steps to avoid credit card scams:

1. Check Card Statements on a Regular Basis

Make it a habit of thoroughly vetting every credit card statement, paper-based or digital-based.

If any information or charges seem suspicious, immediately call your card company and recheck the statement. If any charges are indeed unauthorized, immediately report the fraudulent activity and cancel the credit card right away.

2. Act Fast With a Lost or Stolen Card

Despite conventional wisdom, consumers don't have to be actively targeted by a card scammer to be the victim of fraud. A lost pocketbook or cell phone with your card data embedded inside can easily fall into the hands of a card thief who'll likely go on and drain your credit card limit if you don't take steps to prevent that outcome.

Remember that by reporting any suspicious charges, or lost or stolen cards, you'll remove, by law, any responsibility you have for further charges. Loss of a debit card can cost more – if you wait more than 60 calendar days after your statement is sent to you to report it, you could lose all the money in your account.

3. Be Diligent With Your Card

Make sure you know where your credit or debit card is on an ongoing basis.

Never leave your credit or debit card lying around out in the open. Instead, store it away safely in a secure place in your purse or wallet, and only carry it when absolutely necessary.

Additionally, don't store your card number, or other relevant personal data (like a Social Security number) loosely on your smartphone, like in the "notes" section, or in a text or email. Fraud artists can easily and quickly dig the needed data out and use it to commit credit card fraud.

4. Check for Security

When you're online shopping, and planning to use your credit card, ensure that any page that asks you to enter credit card information has "https" in the address bar (the "s" means secure) and a padlock icon at the bottom of the screen.

5. Avoid Email Scams

Online credit card scammers like to use phishing schemes to get your card data. Don't fall for these scams. Delete any suspicious emails that you suspect are purporting to be from your financial institution or a favored retailer. Also, don't click on any email link unless you know exactly who's sending it.

6. Don't Offer Personal Information to Strangers

Never reply to a stranger online, either via text or email, or on social media, and offer any personal information. Remember, legitimate companies will not ask you for your credit card number without a valid reason, and almost always because you initially reached out to them first.

Above all else, apply a healthy dose of common sense to your credit card protection quest.

For example, take the sensible step of contacting your credit card issuer and asking why suspicious charges appear on your credit card bill, or on your debit card statement.

Or, never share your card information with strangers, or only use a single password on your card account – studies show that cards are harder to steal online with an extra layer of password protection.

Also, contact your credit card provider and ask what they're doing to protect your card and your data – working as a team significantly boosts your chances of avoiding credit card scams.

Let's face facts – if you don't take credit card fraud seriously, scammers will, and at your expense. Consequently, you'll need to take a big role in stopping credit card scammers in their tracks.