Thankfully, the law here is in your favor – but only if you act quickly.

Before I lay out the steps to take once your card has been compromised, above all you need to start doing this one thing: check your credit card statements regularly! Even better, check your account online.

Since you have to report credit card fraud within a short amount of time to get liability protection under the law, you’ll be able to catch any suspicious activity right away the more often you check up on things. Sounds like common sense but truth is, few people do it. Five minutes a week is a small price to pay to avoid getting taken advantage of.

If you do think your credit card has been compromised, you don’t even need to wait until money has been charged fraudulently to take action. Especially if you’ve lost your card or think it was stolen, you should go ahead and take these steps:

1. Contact your credit card company or bank. This is the first step to take if your card is lost or stolen, or if you think that the number has been stolen and used fraudulently.

Your credit card company can’t hold you liable for more than $50 of fraudulent charges, and if your number has been stolen but not the card, you’re not liable at all. However, this does depend on your acting quickly, so call your company as soon as possible. They should place a freeze on the account until you can find a card that was lost, and if you know the card was stolen, they’ll need to cancel the old card and issue you a new card with a new credit card number.

2. Contact the fraud authorities. Next, you need to file a report with the local police. Get a copy of the report in case you need to deal with credit reporting bureaus or your credit card issuer regarding the fraudulent charges.

You should also file a report online with the Federal Trade Commission at the Consumer Sentinel Network. Filing a report won’t necessarily make getting your money back easier, but it may give the FTC information needed to catch credit card fraud criminals in the future.

3. Contact the three major credit reporting bureaus. Equifax, Experian, and TransUnion can put an alert on your accounts that will contact you if someone attempts to open a new account.

For example, if someone steals your information and tries to take out a credit card in your name, the credit card company will check your credit. Then, the reporting company can contact you, and you may be able to prevent someone opening new lines of credit in your name.

Another option here is to put a freeze on your credit accounts so lenders can’t check your credit history and no new accounts can be opened. Just be aware that you’ll have to give it a few days to un-freeze your account when you actually want to open a new line of credit in the future.

4. Send it in paper. Sending letters with the details about your credit card problem can help you ensure that the credit card company and credit reporting bureaus can’t mess up your information in the future. You can also get a free credit report as a fraud victim so you can double check that nothing has been opened that you don’t recognize, which is a great idea any time you’ve been a victim of credit card fraud or identity theft.

These four steps aren’t hard, and they should certainly be taken quickly if you’re the victim of credit card fraud. If you simply can’t find your card but aren’t sure if it’s actually been stolen or used fraudulently, you’ll just need to contact your credit card company to put a hold on your account or to issue you a new card and deactivate the old one. Just make sure they issue you a card with a new number, in case the old card was stolen and someone took the number off of it but just hasn’t used it yet!

Ashyia Hill is a social media advocate at CreditDonkey. She helps entrepreneurs find business credit cards with rewards they’ll actually use.

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I’m sure you’ve heard plenty of horror stories about outrageous fees, insane interest rates, and crippling debt that all come with the use of plastic for your purchases. With all the bad media attention credit cards have gotten over the years, and recent laws unmasking the shadowy underbelly of the banking industry, it harder than ever to like the damn things.

But to throw them out completely is a mistake. A big mistake. Because with the right tactics, credit cards can be powerful tools in your financial life.

1. You get an “out” with credit cards.

If you ever decide to buy something and get charged more than you expected, you can always dispute the charge. This can be a great help, considering you’re using the “pull” of your big strong credit card company to resolve any disputes with merchants. In most cases, they’re on your side.

Although being able to dispute a credit charge isn’t the greatest customer protection available, it offers a lot better protection on stuff you usually buy with cash or your debit card. After all, while the issue is in dispute, it’s not YOUR actual money that’s getting tied up in the meantime.

2. Credit cards allow you to instantly meet an emergency.

One of the greatest benefits credit cards provide is that they’re actually pre-approved loans, instant money in case any emergency situation should present itself. When it comes to the subject of easy cash, it’s always a catch-22. However, the thought of being able to get your hands on some cash during an emergency can be critical. Even in the event that your rates are ridiculously high, in a real emergency, when your wallet is cornered by debt, and you have no friends or family to turn to, plastic can provide your wallet and bank account with comfort.

3. Forget paying for up to 2 months when using a credit card.

The big difference between credit and debit is as soon as you swipe the debit card, the money is taken from your account almost instantly. With a credit card, you might not have to pay that money for up to 2 months! Most credit cards have a grace period of 20 days or more before interest starts to accrue, so use that time wisely! If you charged something immediately after your last statement arrived, you can usually hold off on actually paying for it, interest-free, for almost 2 whole months (the amount of time it takes for your next statement to arrive, plus the grace period to they allow you to pay it.) Of course, this time is reduced if you made the purchase near the close date of your billing cycle, but even then you can get 20 to 30 days of interest-free money during the grace period.

4. You’re offered a protracted warranty with some credit cards.

Most times, when you visit a popular electronics store, the salesman practically falls over himself bragging about the benefits of their expensive extended warranty. What you may not know is most major credit card providers give free extended warranty benefits on a few of their cards. American Express is particularly good about this. What’s not to love? You don’t break your bank, and they usually will throw on an extra year of security when you use the card to purchase items that qualify.

5. The safest way to shop online: Credit cards.

The only way to really shop online is with a good credit card, especially if you need protection from fraud or an item you think might go bad before its time. It’s much easier to track the charge, hold it, or dispute it. And if someone steals money off your credit card, you don’t have to pay it. Shopping online wouldn’t be what it is today without this added layer of protection.

6. You can analyze your expenses by using credit cards to help you budget.

A great way to track the purchases you make is by getting itemized statements (I personally am fond of both monthly and annual statements) that place expenses into categories broken down by type: like eating out, groceries, gas, etc. This feature costs nothing and is definitely a lot better than trying to save all your receipts and do it all by hand.

7. The world won’t end because your credit card is lost.

In the event that you notify the bank within 30 days of a lost or stolen card, by federal law your maximum liability is $50 (which is reduced to zero with most major card issuers). This isn’t the same with debit cards, and they have much higher expected liability.

- If you notify your bank within two business days after you’ve discovered your debit card missing, liability is up to $50.

- In the event that you forget to notify the bank after two business days, however, before 60 days after your bank statement is mailed to you, liability can go up to $300.

- Liability becomes unlimited if 2 months pass after your bank statement is received with listing of your non-contractual withdrawals.

When it comes to debit cards distributed by MasterCard and Visa, the liability is capped at $50, though that’s by a debit holder’s personal choice (no federal law protects you like credit cards do). Interestingly enough, if you ever plan to spend foolishly, or if you get robbed, credit would be safer than debit.

With all the bad press credit cards get, it’s easy to give up on them completely. But when credit cards are used correctly, they provide one of Western Culture’s greatest comforts. I realize it’s hard not to buy everything you want with them right now and worry about paying for it all later, but a small dose of self-control will get you everywhere.

Always remember: paying the card off every month is the most logical, and successful way to have financial peace of mind and beat the banker at his own game.

About The Guest Author: Thierry J. Snipes is a full-time freelance writer who enjoys reading, writing, research, singing, and watching movies. With over 5 years of writing experience in finance, small business, and cash loans, he’s always passionate and eager to craft enlightening prose.

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So have I. When I was much younger our family sweated at jobs we hated just to keep up with all the payments. And it’s not like we were living the high life off the debt, either. Most of it was spent on basic necessities and the occasional simple pleasure.

If you’re clever, credit cards are a great way to “float” the payment of anything you buy for as much as 25 to 30 days after purchase – taking advantage of the grace period without racking up interest. That’s how I make use of them today, and I think the only sensible way to deal with personal credit (business credit is another thing entirely.)

But beneath the obvious veneer lurks a more sinister legal truth – one that can trash your credit rating and leave you drowning in fees.

At first these lies sound sensible, even smart. However, their bite is often worse than you could imagine.

Lie #1. Scribbling “Check ID” in the signature area to ward off identity theft

Some well-intentioned cops even recommend this. The idea is to deter would-be identity thieves by prompting the cashier to double-check to ensure the “carpet matches the drapes” so to speak. After all, if the con artist can’t produce valid ID, he can’t make off with the loot, right? And besides, why spread around copies of your signature to anyone who peeks inside your purse?

Well, even though an unsigned card is invalid under official credit card agreements (the ones nobody actually reads) most under-paid, over-worked retail employees will skip right over it, rendering your defense meaningless.

What they’re SUPPOSED to do is check your signature against a valid driver’s license or passport, but even if they follow protocol it’s easy for a trickster to swirl your signature on command… because the reality is the employee has better things to do than hold up a growing line of impatient customers over a slight difference in handwriting.

From a liability standpoint, you’re only technically responsible for the first $50 of stolen money… but any company worth their salt won’t even hold you to that – not if they value your business as a customer in good standing.

So what do you do? In my experience it doesn’t matter if you write “Check ID”, your name, or sign “Adolf Hitler” to the back of a credit or debit card… no one really enforces the legality and a “Check ID” designation isn’t going to change a thing if the card is ever actually stolen.

I say just leave the damn thing blank.

Lie #2. You need each one of the “Big Four” credit cards to survive in modern society

You’re trapped at the mercy of a hurricane-like storm down a forgotten road outside El Paso, Texas. You could escape certain doom if only the toothless old man at the beaten-down gas station would accept your Rewards-Plus card.

Rubbish. Even though American Express and Visa have fooled everyone about this in their ads for years, it doesn’t make it true.

For example, I shop a lot at Sam’s Club. They “only” take Discover and their own branded card. Costco “only” takes American Express. But you know what? I don’t use either of them at those places. I use my debit card, even though it’s technically a “Visa” and when I want to be private, I use cash.

Amazingly, we here in America sometimes forget about cash. Businesses still accept the stuff, you know.

With credit cards, you should really only have 1 or 2 at the most. Personally I carry a Business Visa and an American Express, in addition to my regular debit card. The American Express actually serves no real purpose other than making me feel “cool” with the prestigious rare card they issue.

Speaking of that…

Lie #3. American Express cards give you unlimited purchasing power

If you look closely, their famous “no preset spending limit” has a little disclaimer star beside it.

Even if you’re one of the few thousand in the world with a Centurion Card (otherwise known as the American Express “Black” card – the same one James Bond carries) you STILL have a limit, albeit a very high one.

What American Express does is calculate your limit dynamically. It’s in constant flux based on your finances and past history with the card.

When a big purchase comes through, American Express might say “Ok, let’s see how you handle this one.” If you pay it off by the due date without a fuss, they say to themselves “Ok… this guy’s a spender. Next time we’ll let it slide.” And so on, and so on. If you structure it right, you can flex the boundaries of your limit well beyond that of mortal man.

And that’s how the lie spreads. But for most people, AmEx is gonna eye you very suspiciously when that $12,000 cruise comes through after you claimed to only make $30k a year. They’ll probably swat it down like a fly unless you call their office beforehand to assure them it’s on the up-and-up.

Lie #4. All cards with Visa or Mastercard logos will affect your credit

We’re surrounded with charge cards, credit cards, debit cards, ATM cards and God-knows-what else. Most people just assume that if it has the Visa or Mastercard logo, it works “kindof like a credit card” and will therefore affect your credit either positively or negatively.

That’s not true.

Charge cards you pay a fee for and let you put whatever you want on them as long as you’re responsible enough to pay it off every month. Debit cards instantly take the money out of whatever cash account they’re linked to. ATM cards ONLY work at ATM’s and are worthless without a PIN (much like debit cards, except they won’t let you purchase anything directly.) And of course credit cards loan you small bits of money for whatever you purchase and charge interest if not paid within the grace period.

Debit cards and ATM cards are not taken into account when calculating credit scores. They are considered cash in that respect.

Lie #5. They’ll think more highly of you if you pay more than you owe

Actually the opposite is true.

Credit card companies love good customers, but a “good customer” is not someone who pays off their bill all the time and certainly not someone who pays more than they owe.

Remember, this is a “credit” account, not a bank acocunt, and these guys are in the business of making money. They do that primarily by charging interest and fees and they hate straight-laced responsible citizens who always spend less than they make.

This isn’t something that will help your credit score either. It doesn’t matter if you pay off the balance or throw an extra grand on there to where they actually owe you money, it still gets reported as a “zero” balance to the credit agencies.

Lie #6. If you go over the limit, but pay it back in time, everything will be OK

No, everything will not be OK.

Back in the old days, credit card companies used to decline any charges that spilled over your limit. These days their accountants have discovered that’s bad business. They make far more dough when they let it slide, and quietly ding you with an overage fee.

So that’s why their computers watch your account with an eagle eye, eager to sock you with penalty fees and a jacked up interest rate, which will certainly come as a nasty surprise on your next statement.

And they won’t just do it one time, but each time you go over… even if it’s during the same billing cycle.

Lie #7. Sellers can set a minimum charge amount

There’s a great Chinese restaurant I used to frequent that kept a sign posted next to the cash register:

“Minimum credit card purchase: $10″

And guess what. Everyone obeyed it. You could see frustrated guests fumbling around in their pocket for change when they’d planned on charging dinner that evening.

Good for the restaurant, sure, but a violation of their merchant account agreement with the credit card companies. I knew this and called them on their bluff. The merchant company got wind of the news and threatened to pull their ability to take cards altogether. It wasn’t long before they took down “$10 minimum” sign.

Did I do this to be an asshole? No, I did it because it’s annoying, wrong, and as a merchant myself I know that people will buy more from you in the long run if you don’t set such short-sighted terms and conditions.

From a business point of view, I did them and all their customers a favor.

Credit cards make life easier, but they also open you up to harassment and invasion of privacy. To hide your money and keep your private life under control, check out Joe Decameron’s “Perfect Privacy Solution” available here at The Legal Secrets Report.

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