Using Credit Cards strategically

Using credit cards strategically ensures that we maximize our profits, minimize our losses and avoid credit approval delays. First, we want to make sure that we maximize our rewards when using our credit cards. Many credit cards offer substantial rewards whether it is rebates on gas purchases, travel and all other transactions. Depending on where we use our credit cards the most, we want to make sure that we use the card that offers the most rebates for that particular purchase category. For example, some cards offer 2% cash back for travel related purchases while others may focus on cash rebated for gas purchases or extended protection for product loss, theft and damage. Therefore it is very important to be selective when it comes to applying for and using credit cards based on our needs.

Second, although most credit cards offer liability protection against credit card losses due to fraud, consumers must be diligent in monitoring their card transactions, detecting fraud and notifying banks when they detect unauthorized transactions. For minimizing identity theft related losses, it is important to own fewer credit cards which meet our needs, use the credit cards only when it makes the most sense, and monitoring transactions to detect fraud. Every time, we use our credit cards for small transactions such as when buying coffee, we unnecessarily increase our identity theft risks, therefore using credit cards strategically is very important for reducing identity theft risks.

Lastly, you’ve probably received a call or email from your credit card company at some point asking you to verify certain card transactions. As you may be aware, banks have sophisticated fraud detection systems which analyze billions of daily credit cards transactions looking for suspicious patterns when comparing them to the cardholder spending habits and other fraud cases. These fraud detection systems have evolved and improved over the years and will continue to get better as financial institutions attempt to further minimize their credit card fraud losses.

One way that cardholders can avoid credit approval delays is by using credit cards strategically and think like a fraud detection system. For example, while on vacation, you want to consider using the same card which you used to book the vacation package including hotel and airfare. The reason for this is that a fraud detection system might flag an out of town transaction as fraud if the same card was not used to reserve the hotel or purchase the plane tickets depending on whether the system was configured by humans to identify this pattern as potential fraud. Of course, flagging a transaction as potential fraud requiring cardholder verification can depend on many factors including the transaction amount, international location, etc. However, if the system is configured to flag an unrelated or out of place transaction as fraud, cardholders can avoid transaction approval delays by using the same card for related transactions such as using the card to buy the vacation package as well as shopping and dining while on vacation.

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