Tips to Avoid Credit Card Hacks and Maximize Rewards

Unveil successful techniques to avoid credit card fraud!

Even with all the preventative measures in place, the problem of credit card fraud persists and results in monetary losses for numerous people. It is essential to stay informed about the different fraudulent schemes in order to prevent becoming a target and secure your finances.

Prevent becoming a target of typical credit card scams. Source: Freepik

Learn about the common strategies employed in credit card scams! Join us for expert insights on how to recognize and prevent these deceptive practices successfully.

Steer clear of opening numerous cards to take advantage of sign-up bonuses

Numerous credit card issuers attract clients with appealing welcome bonuses upon account opening, prompting certain people to consider applying for numerous cards just to enjoy these incentives.

Using the system to receive benefits through credit cards is often known as “churning.”

At some stage, the benefits received from these cards might no longer be worth the costs involved.

Providers have the option to cancel your reward perks, deactivate your accounts, or decline your future requests.

If you decide to close your card within the first year of activation, you may forfeit any bonus rewards that were earned.

Getting the Most out of Gift Cards for Rewards

Employing gift cards to enhance rewards can be a bit ambiguous, as how these transactions are categorized depends on the issuer and where the purchase is made.

For instance, purchasing a gift card worth $25 from a retailer that provides extra points could possibly help you accrue those benefits.

Using this method too often to increase rewards could be seen as manipulation by the provider, which could result in losing accumulated points or possibly having the account shut down.

Additionally, the utilization of gift cards may nullify the usual purchase protection provided by credit cards.

Acquiring Prepaid Cards

When it comes to obtaining prepaid gift cards, some may view it as a simple means of receiving rewards, particularly for the purpose of making credit card payments. Yet, these transactions can frequently come with charges and interest rates akin to cash advances, which could diminish the anticipated advantages.

Sending Money Using Payment Applications

Services such as Venmo, PayPal, and CashApp provide a convenient way for users to connect credit cards for making transactions. While this feature may seem advantageous for earning rewards, the actual outcome could be contrasting.

Most of these platforms usually apply a charge, usually approximately 3% for each credit card transaction, an amount that may exceed the benefits obtained.

Moreover, these transactions could be labeled as cash advances by financial institutions, leading to the absence of rewards, additional fees, and immediate interest accrual.

The Fifteen Three Strategy

One popular method to boost credit scores involves using the 15/3 tactic, which recommends making two payments on credit cards each month.

According to the idea, it involves paying 50% of the amount owed 15 days in advance, with the remaining 50% due three days before the deadline.

Although it is a common belief that this method results in more timely payments and a positive influence on credit scores, the actual outcome is different. Most credit card issuers usually only report a single payment each month, restricting the expected enhancement in credit scores.

While this approach can help lower credit utilization, achieving the same results is possible with just one monthly payment.

What Could be the Potential Ramifications?

Effects on Your Credit Rating

When reviewing your eligibility for loans, financial institutions take into account multiple elements, such as your credit rating.

The determination of your credit score is influenced by variables like past borrowing behavior, credit checks, and punctuality of payments.

Having an abundance of credit inquiries, such as applying for numerous credit cards in a short span of time, or making late payments, could have a negative impact on your credit score.

Possibility of Exceeding the Budget

If you want to enjoy appealing benefits such as frequent flyer miles, credit card companies usually require a minimum spending limit, which is usually set at around $2000 to $3000 during the first few months after activating the card.

Therefore, it is recommended to be careful and avoid opening multiple cards at once. Just having two cards could mean needing to spend $6000 quickly to benefit from any rewards.