If you haven't been in the habit of checking your credit card accounts online every day, now’s the time to start. The well-known credit card hacking of Target and other retailers should be incentive enough to start paying attention to your accounts. But there are other good reasons why staying on top of your credit life is a good idea. Here are four reasons it pays to be vigilant about your credit card accounts.
1. Spot Fraudulent Purchases Fast
A survey by Javelin Strategy & Research showed that one incident of identity fraud happens every three seconds. Think about it.
As you probably know if you've gotten a phone call about possible fraud, credit card companies monitor your accounts for suspicious activity. They’ve always been aware that catching fraud at the beginning is a way to minimize their losses. These days, you may find that your account has been frozen if your purchases don’t line up with your spending patterns. It’s nice to know that the issuer has your back, but the way to ensure that your accounts are protected is to be proactive and monitor them yourself.
What are you looking for? You want to check every transaction in your credit card accounts and make sure either you or an authorized user made all of the purchases. If you see a purchase you didn’t make, contact your credit card company and report it immediately. Once you report the questionable purchase, your financial losses are topped out at $50, thanks to the Truth in Lending Act. Many major credit card issuers offer zero fraud liability on some of their cards. Even though your financial losses are limited (or even zero), it’s still painful to go through the aftermath of fraud or identity theft. Reporting issues early will help minimize the disruption as much a possible.
It’s common to think that if you check your free annual credit reports, you’ll know if your account has been hacked. Your credit report will reveal whether a new account has been set up in your name. The problem is, fraud on your existing accounts will not show up on your credit report. That's why it's crucial to check both your credit reports and your online accounts.
2. Uncover Gray Charges
A gray charge isn't really a fraudulent charge, but it's an expense that the cardholder never intended to make. Gray charges are often a small amount that might escape your scrutiny if you aren't looking at each transaction. Sometimes, this happens because it’s easy to accidentally sign up for a service on the Internet. For instance, you might try to get a “free” credit score, then later discover you also signed up for a credit monitoring service at $14.95 per month. Or it might be a zombie gray charge, such as a canceled gym membership that you’re still being charged for.
The Aite Group recently conducted a study that showed gray charges on credit cards and debit cards totaled more than $14 billion in 2012. Scan your accounts and look for these items so you don’t waste any of your hard-earned money.
3. Look for Mistakes
Credit card issuers sometimes make mistakes on fees or transactions. Maybe you got wrongly charged for a late fee – or were charged for a paper statement fee and you only get electronic statements. Also look for purchase transactions that are listed twice, which can wreak havoc with your credit limit and maybe even damage your credit score if the problem isn't resolved quickly. If you find any mistakes, call your issuer and correct it right away. State your case and, if you aren't satisfied with the response, ask to speak with a supervisor.
4. Check Your Balance
Reminding yourself of the current balance is an effective way to make sure you’re staying on your budget. You should be tracking your expenses anyway, but it helps to see the total balance of your credit cards so you know if you're overspending. Keeping track of your balance also helps you stay out of credit card debt. It's human to give into a splurge from time to time. Seeing a higher-than-normal balance will encourage you to cut back for the rest of the month. If you can't pay your balance in full by the due date, you need to put away your credit cards.
The Bottom Line
Checking your credit card accounts online every day will help you stop fraud and identity theft in their tracks. And there are other benefits: You can save money by spotting errors and gray charges. What's more, keeping an eye on your balance will help you stay out of credit card debt. For more advice, see Should I Pay to Check My Credit Score? and How to Recover from Identity Theft.