Your Money_ The Missing Manual - J. D. Roth [76]
Personal assistance. Some cards offer concierge services that you can use to get dinner reservations, theater tickets, and more.
Fraud protection. This means that if you catch a problem and act quickly, you're only responsible for charges you authorize. And most cards will help if your identity is stolen.
Travel assistance. Some cards let you get into airport lounges, give you ticket upgrades, and provide roadside assistance. Others offer insurance for things like lost luggage, rental cars, and trip cancelations.
If you're not taking advantage of features like these, you're not getting the most from your card.
You can find an overview of your card's features at the issuer's website or by visiting American Express (http://tinyurl.com/amex-benefits), MasterCard (http://tinyurl.com/mc-benefits), or Visa (http://tinyurl.com/visa-benefits). For detailed info, read your credit card agreement or visit the card's website.
Using Credit Without Getting Burned
In order to use a credit card without getting burned, you can't let it change your spending habits. (This is easier said than done—see the box on Choosing a Card.) Remember: A credit card isn't a license to spend—it's just a different way to pay.
In Chapter 4, you learned how a negative cash flow leads to debt and unhappiness. For many folks, credit cards make it far too easy to overspend and wind up in debt. Here's the most important thing to remember: If you're using credit cards to spend more than you earn, you're using them wrong.
Lots of people pay for things with credit because they don't have the money to pay cash, but that's a really bad idea that'll likely get you into debt. To change how you use your credit card, think of it as a debit card: Don't buy anything with it unless you already have cash in the bank to pay for it. And don't let your credit card influence your shopping decisions. You should decide to buy something first, and then decide how to pay for it; don't tell yourself, "I have a credit card, so I can buy this." (Like Mom always said, just because you can do something doesn't mean you should.)
Note
A credit card isn't an emergency fund. You shouldn't be holding onto plastic "just in case something bad happens." That's what your actual emergency fund is for. For more on saving for a rainy day, see Establish an Emergency Fund.
Here are some other ways to use credit cards effectively:
Read the fine print. Read the legal stuff that's on the application and comes with your card, and that's in any future mailings. Yes, this can be tedious, but it can help you avoid headaches and help you discover hidden features (see the box on Using Credit Without Getting Burned). If you don't understand something, call customer service and ask them to explain it. (For help reading the legalese, check out Wells Fargo's credit card glossary: http://tinyurl.com/cc-glossary.)
Review your statement every month. Due dates, fees, and interest rates can change, so keep an eye on those notices that come in the mail. And double-checking the list of transactions can help you spot fraud. Many people (including me) check their statements online several times a month. By paying attention, you can prevent small annoyances like extra fees or unauthorized charges from becoming big hassles.
Don't be afraid to speak up. If you notice something strange on your bill, want to dispute a charge (Disputing Charges), or want a rate reduction, call customer service.
Note
Asking for rate reductions has become a little trickier since the recent credit crisis. If your credit score is too low, asking can hurt you—the issuer might actually jack up your rates. According to credit guru Liz Pulliam Weston, it's important to know your credit score (see Your Credit Score) before you ask. "If your FICOs are 750 or above, you're golden," she says. "Below that, it's murkier."
Be wary of special offers. On my desk, I have an American Express mailing about a "free" appointment book. It's not really free, of course. If I take the bait, I'm on the hook