5 ways thieves steal credit card data

Gone are the days of the good old-fashioned purse snatcher. With little brute and more skill, thieves only need a minute, sometimes a second, to pilfer your credit card data. "Back in the beginning, they got the imprint of credit cards from the carbon copies they dug out of the trash," says William Noonan, assistant special agent in charge of the Secret Service's criminal investigative division. "Technology has changed things." The number of compromised records has been on the decline the last two years, according to the Secret Service, after reaching a record high of 361 million records in 2008. The trend might reverse this year, however, after a recent string of mishaps. This spring criminals hacked, phished or skimmed their way into the systems of Michaels Stores, Sony, marketing firm Epsilon, Citibank and even security expert RSA, among others. In some cases, they only obtained names and emails. In the worst cases, they got credit card numbers. The schemes are simpler than you think. Bankrate presents the most common ways thieves pilfer your credit card information. Modus operandi: The waitress whisks away your credit card and swipes it through the restaurant's register. Then, she pulls out a small device, about the size of an ice cube, from her apron and swipes it through that, says Sergeant David Schultz of the Fort Bend County Sheriff's Office in Texas. While you're scraping the last of the chocolate frosting from your plate, your credit card information has been stored in the device, known as a skimmer. The waitress returns your card and performs the same magic trick on dozens of credit cards in a week. Known whereabouts: The data-stealing waitress has been known to moonlight as a bartender, sales clerk or at any place where she can take your credit card out of

Modus operandi: Sally, Simon and Bud walk into a toy store. Sally and Simon roam the aisles, while Bud waits in line to check out. When Bud is at the register, Simon comes running up to the clerk, screaming that his wife has fainted. As Sally and Simon distract the sales clerk, Bud switches the credit card reader at the register with a modified one of his own, says FICO's Fraud Chief Mike Urban. For the next week, the sales clerk unwittingly collects credit card data on the modified reader until the trio returns, takes back the modified reader and restores the original terminal. Known whereabouts: The trio will hit other retailers and restaurants, but sometimes the threesome will instead be a duo or a solo criminal. Modus operandi: The Gas Lass parks her car in front of a gasoline station off the turnpike. It's late. There's no one around except a sleepy attendant at the register inside. The Gas Lass attaches a skimmer over the credit card reader at the pump. It's a special skimmer: It emits a Bluetooth signal to a laptop close by, says Noonan. The Gas Lass pays, heads off to the motel next door and sets up her laptop to receive the data from the compromised pump over the next several days. Known whereabouts: The Gas Lass installs skimmers over ATMs, parking meters, vending machines and any other places with unmanned credit card readers.

Modus operandi: Harry the Hacker installs malware -- a type of software that damages or infiltrates a computer or network -- onto a legitimate website with low security. The malware instantly downloads onto your computer when you visit the site and allows Harry to access your information. In another scenario, Harry puts malware on public computers and gathers the information you share with that computer, says Urban. Harry also infiltrates the computer system of banks, retailers and other businesses and extracts personal account information, Noonan says. Phishing Phil uses malware to go after your laptop. He sends emails with attachments that promise dancing kittens or some other bait. When the user opens the attachment, malware instantly downloads onto the computer and leaves confidential information vulnerable. Phil also sends emails from a familiar sender with a link to a contaminated website that installs malware onto your computer. Some malware, called spyware, allows Phil to capture every keystroke including passwords to your financial accounts. Modus operandi: So what happens to these pieces of data when they're in no-good hands? They get sold. The waitress, trio or Gas Lass sells each swipe for $20 to $40 a pop, says Urban. Harry the Hacker and Phishing Phil will get $5 to $10 a card and often sell the information online at the eBay of credit card activity. The person who buys the information verifies it and then sells it to a person who creates fraudulent credit cards with your account information attached to it. The card maker then sells it to other criminals who buy goods such as stereos or baby formula and sells them to regular consumers.

How credit cards can make money for you

Credit cards of late have a negative connotation, and are pronounced as complete no-no by many, because of the high interest rates that are charged on late payments/defaults.

Don't let this negativity cloud perception of the product. You would be surprised to know that, if you are judicious in using this product, you stand to benefit monetarily, and of course it eliminates the need for you to carry cash everywhere.

More often than not the problem is that people do not understand the product well and hence are not able to use it to their advantage.

The credit card company offers you a 'free credit period' of around 50-55 days. The misconception most people have is that this free credit period is from the date of purchase. It is actually from the date of billing. E.g. Mr Anand's billing cycle date is December 28 to January 27 and his credit free period is 50 days.

If his purchase was on January 22, he would enjoy credit for 25 days. However if he made the same purchase on say Jan 1, he would enjoy credit free period of 47 days. So if you plan properly, you can enjoy maximum credit every month, which will help you manage your cash flows effectively, and will also help you earn the extra bit of interest on the cash that you have currently not spent on making the purchase.

In addition to the free credit period, every purchase made on your credit card, earns you reward points which when accumulated to a big amount can be exchanged for a range of items such as electrical appliances, flight tickets, home ware etc. These rewards will differ from company to company.

Also credit card companies offer discounts, promotional offers with respect to shopping, entertainment etc. For example, if you buy petrol from a particular brand of petrol pump, you get a small percentage of money credited back to your account after a certain number of days.

For the credit card to make money for you, two key things you need to keep in mind

Cost of default: The interest rate on defaults ranges from anywhere between 2 per cent-3.5 per cent per month. So in effect it is a whopping 24 per cent-42 per cent p.a. Also, the interest starts from the date of purchase and not the billing date i.e. you do not get any interest-free credit period and all future purchases also start attracting the interest charges from the date of purchase.

So use the credit card if and only if you're sure of having the means to pay the bills in time. Also, don't forget that your credit score will get impacted too which will impact your future borrowing.

Credit limit: Keep a tab on your credit limit. Overshooting your credit limit will also have dire consequences for you with respect to the interest charged and your credit score.

How do you ensure that your credit card makes money for you?

Widen the usage of your credit card (small and big purchases): You might as well earn bonus points and interest on the cash that you have not currently used, to make the purchase. You can use the credit card to pay monthly rentals, grocery bills, utility bills, gift expenses, subscription expenses etc.

So the cash that you have not used to make the purchase will earn interest for you or will be used for fulfilling other immediate needs. For example, Maitali purchased an electrical appliance for Rs 28,000 using the credit card she possessed. The purchase was made such that she could enjoy a credit free period of 45 days. The cash that she would have used to purchase this appliance is now lying in her savings account which is earning her an interest of 3.5 per cent p.a.

So if she decides to pay the bill after enjoying 40 days of free credit, she earns an interest of Rs 107 in her savings bank account. Not only that, she has also earned some reward points on the purchase. The other advantage of using the credit card is your payments are recorded which makes it easier for you to keep track of your expenses.

Appropriate use of bonus points: Use the bonus points that have accumulated on buying necessities (house hold appliances, clothes, groceries etc.) rather than using it on things (luxuries) that aren't really important to you. Only if the bonus points are used practically, you are actually saving cash.

Conclusion

Credit cards if used prudently will help you in managing your cash flow better, and at the same time, will provide you monetary benefits. That's because you get interest free money for some period of time and you also earn reward/bonus points on the same.

But if you use it without deliberation, it can prove to be disastrous as interest rates charged on payment delays are very high. Also, your credit rating will take a beating, as banks report these things to the credit rating agencies, which in turn will include it as part of your credit report.

Don't forget that credit score will not only determine whether you will get a loan but will also determine at what interest. Let not easy availability of credit and attractive rewards offered fool you into making impulsive purchases. It will prove to be rather costly.

Managing your credit card

A credit card is a useful tool, when managed judiciously but a lurking danger if you mismanage it. Currently, threatened by the global financial crisis banks are changing credit limits, doing away with interest free periods and charging higher interest rates on the credit borrowed. One of the first things you need to keep in mind, is read the term and conditions when you apply for a credit card. It could be a laborious process but something that has to be dealt with, to protect yourself from any rude surprises that might be in store for you in times like this.

One hears stories of money being taken from the savings account of a person who has a credit card with that particular bank! Well, banks are allowed to do so, when a default occurs, the clause is covered in the terms and conditions. Banks also have an auto debit facility to claim a minimum payment on credit borrowed, if in case your account does not have enough funds, banks are allowed to levy a fine, which could be ridiculous amount that is nearly half the amount you borrowed!

Profit from your credit card !
Credit cards can be useful when you make a profit out of it! Now, how is that possible? Well, it all depends on the kind of card you purchase, its best to opt for a lifetime free credit card that does not have an annual fee attached. Also get a card that matches your lifestyle. If you shop a lot, see that your card offers a lot of discounts and cash back rewards for the all the shopping you do with a card. If your job allows you to make frequent trips, get a card that gives you several travel friendly schemes on eating out, hotel stays and airline ticket discounts.

High interest rates

Though the whole point of having a credit card is to provide you with cashless convenience, it makes money sense to decide, when, how and why you should use it. Never get tangled in the web of debt, especially when it comes to credit cards. Though its an ideal resource to tap into, when you need to ramp up funds quickly, the interest rates charged on a credit card are much higher than even those charged on personal loans. Remember that cash withdrawals from an ATM with your credit card will be charged a processing fee of around 2% and an even higher rate of interest than your regular purchases on the card.

Taking a loan on your credit card

Most credit cards do offer an EMI facility to pay any loan you take on your credit limit. It normally takes just one or two business days to obtain this loan and this can even be arranged over the phone with no documentation. However, the difference lies in the high interest rate charged, which can be as high as 30-42% as an annualized rate. The cards that offer a comparatively lower interest rate in the range of 22-26% most often do not have an EMI facility for repayments.

Though credit cards seem like a good bet for short term fund requirements refrain from using it, unless you can make the credit card usage count for some kind of benefit. Using your credit card purchases for an interest free period is fine, however remember the bank can do away with interest free periods anytime it chooses to and also hike the interest rates, according to its free will. Hence, be wary of a credit card and use it sensibly.

Another important aspect in manging your credit card is to keep a careful tab on your credit card statement that should reach you on a monthly basis.

Understanding your credit card statement

Scrutinize your credit card statement to understand your spending pattern. If a bill does not arrive on time for you to pay your dues report to the bank immediately. Also keep track of the credit card bill through your online banking account.

The first detail you need to clarify is your name, billing address, card number et al to make sure its correct. The second aspect is the total outstanding balance and current due date for payment. This column will also have the previous month's transaction using the card.

Minimum Payment Due


The second aspect to be scrutinized is the list of purchases or transactions done throughout that particular billing cycle. Go through each particular of them list to see if they match your expense records. Usually your statement will have a reference number that can be quoted if you feel any charge specified needs to be clarified.

Utilizing your reference number for billing errors and unauthorized charges

Always commit in writing within 60 days ( this time period varies from bank to bank) of the receipt of your statement the complaint regarding the billing error or unauthorized charges. Include all the following particulars in your complaint:

Your name, address, account number and reference number


Error description


The date and amount of the charge


Reason cited for the dispute of charge

Check your credit card statement if there is a specific address to which the complaint has to be sent to. This might be at the end of the statement or as part of the fine print, behind the statement.

Your credit card statement also has the other particulars like

Credit Limit
This is the maximum limit up to which you can make purchases or withdraw cash on your card. This credit limit can be revised by your credit card company depending on your credit score and your repayment track record

Available credit limit

This will be the amount you can still avail after you have made a bunch of transactions using the card.

Cash limit
This is the actual cash limit up to which you can withdraw on your card, which is included in your credit limit.

Statement Date
The billing cycle ends on a particular date after which the statement is printed, the interest rates applicable for your card transactions are calculated using this statement date as the starting point.


Total outstanding Amount Due
This includes past and present credit expenses and other charges levied to your account.


Reward Points Summary
This provides you cash discounts and other benefits on purchases made when accumulated over a period of time. This column contains all the past points earned and utilized by you till that particular billing cycle.

Grace Period
A grace period is the number of days you might get as relief before the high interest rates start kicking in for the remainder of the amount that is due. This can be anywhere between 20 and 25 days. However, remember you will be eligible for this grace period only if your previous month's outstanding amount has been paid in full.

Own a credit card responsibily
The responsibility of learning to use your card is imperative when you own a credit card. For this learning it is important for you to understand your credit card statement and, the terms and conditions associated with your credit card policy. Armed with this learning you can make the best out of this cashless convenience

Your 5-minute guide to credit cards

Credit cards do have some benefits, but it's easy to get into financial trouble if you rely on them too much. Here are more than a dozen tips for using cards wisely.

Use a credit card wisely and you can reap benefits like cash back, bonus points and airline miles, not to mention a better credit score. Use it unwisely and you could end up under a mountain of debt.

No. 1 rule is: Pay off your balance every month. Otherwise, you'll pay interest on your purchases. Paying the balance takes discipline. About 40% of households carry credit card debt, according to the Federal Reserve. And although the Credit Card Accountability, Responsibility and Disclosure Act makes significant strides for consumers, it will likely make credit harder to get and more expensive -- and it doesn't take effect until 2010.

Protect your good name

Make your payments by the date -- and time -- they're due. Late fees are usually around $30 and can run higher. Late payments can also trigger an interest rate increase. Because late and missed payments lower your credit score, the interest rate can go up on your other credit cards and for future loans as well.

Limit the number of cards you have. Experts recommend having two to six cards. Applying for lots of cards can hurt your credit score. Conversely, closing several credit cards at once will trigger a decrease in your score.

Read the fine print. Know the interest rate you will be charged, when your payment is due and your credit limit. The new credit card law sets out when interest rates can be changed, how your payment is applied, what the grace period is, who can have a credit card and much more. But keep in mind that these changes won't kick in until 2010.

Negotiate. If your credit score is 700 or above, you may be able to get a lower interest rate or get the company to drop a late fee.

Don't exceed 30% of your credit limit on each card. Credit bureaus don't care if you pay off your balance each month. They're interested in how much of your available credit you use. If it's excessive, your credit score will drop.

The devil in the details

Credit card companies market different types of cards, featuring low interest, rewards or other benefits. Be careful about the terms.

If you're transferring a balance to a new card with lower interest, find out how much the company will charge for the transfer. Urge that it be done electronically so you don't accumulate interest on both the old and new accounts. Low-interest introductory offers may apply only to the balance transfer and not to new purchases.

Reward cards that provide dividends like rebates and airlines miles sound too good to be true, and can be. The higher interest rate charged by most reward cards can more than offset the reward if you carry a balance. Reward offers can change with little notice and may come with budget-busting conditions -- for instance, you have to spend a certain amount to earn the reward.

Convenience? Sometimes

If you buy a defective item or protest a charge, your credit card company is obligated to investigate. If your card is stolen, you're liable for no more than $50 for unauthorized charges.


Other "services" offered by credit card companies have potential drawbacks.
Contactless credit cards make it even easier to purchase items because you don't need to swipe your card or hand it to a cashier. But thieves can scan the info on your card. You can buy a signal-blocking sleeve or make one out of aluminum foil.

Don't use "convenience" checks your credit card company sends you unsolicited in the mail. They're costly -- with a fee of 3% or 4% of the amount you write, plus high interest rates with no grace period -- and don't provide the consumer protection you get when you make a purchase with your credit card.

Credit card protection insurance generally covers only the minimum payment if you become disabled or unemployed, and interest continues to build on your outstanding balance.

Using a credit card issued by a department store you frequent can entitle you to cardholder discounts, but limit yourself to one card. Each department store account you open reduces your credit score.

Good Luck Guys.

The truth about cash-back credit cards

With increase in the competitiveness between different banks for credit card services, card companies offer a host of additional benefits such as rewards programmes, 'lifetime-free' services and cash-back offers increasingly nowadays to engage the brand awareness of the consumer consistently.

The hidden agenda behind each of these offerings is that the banks and financial institutions want the users to spend more. Spending is good as long as it is within predefined limits. This is within the user's control and must be exercised in order to reap the benefits of such offers and yet not become addicted to spending excessively.

Let's take a look at the features of one particular offering which has generated quite a following in recent times -- 'cash-back' offers, which are often promotional schemes for limited periods that are run periodically by all the credit card companies.

What are cash-back credit cards?

When accepting payment by credit cards, merchants typically pay a percentage of the transaction amount in commission to their bank or merchant services provider. Many credit card issuers share the commission with the cardholder by giving the card holder points, air miles or a monetary amount.

A cash-back offer is specifically for providing the card holder a small monetary amount as a reward for using the card.

Which transactions are included in cash-back offers?

Cash-back offers are valid on almost all kinds of expenditures or purchases done through the credit card. That is, besides spends on shopping and eating out, even balance transfers and bill payments are eligible.

How much money is returned through the cash-back offer?

Where a card issuer operates such a cash-back scheme, card holders typically receive between 0.5 per cent and 2 per cent of their net expenditure (purchases minus refunds) as an annual rebate, which is either credited to the credit card account or paid to the card holder separately, for example by cheque.

Cash-back percentage ranges around 2 per cent - 5 per cent for different cards and in some promotional schemes may even go up to 10 per cent exclusive to customers with a good credit profile.

What are the things to keep in mind while using cash-back cards?

There are some things that you should always keep in mind when you opt to avail such cash-back offers.

Where you are spending

The credit card cannot be used at any establishment that you choose. There will be a list of shops, stores, restaurants etc. that will fall into the category of cash-back transactions. If you spend at the establishments mentioned in this list you can avail cash-back, else you do not receive any reward.

The list of approved establishments is available on the credit card issuer's website or else can be asked for from the customer service department.

To ensure that you do receive cash-back, always ensure that you are spending at an establishment mentioned in the list of the bank's approved merchants.

Minimum cash spent

Normally, cash-back is offered only when the credit card holder spends a minimum amount on it. This could range anywhere between Rs. 1500 and Rs. 2500. So if you spend only Rs. 500 on the card, chances are very slim that you would be able to get any cash-back on that transaction.

Amount of cash-back

Normally, banks place a cap on the maximum amount of cash-back that it offers. It is important to check this because even if you have spent more doesn't necessarily mean that you are going to get a cash-back amount as per that transaction.

For example, if the bank's says that there would be a 10 per cent cash-back offer on all purchases, they would normally cap the maximum cash-back amount at Rs 1,000. So even if you spent Rs 40,000 and expected a cash-back of Rs 4,000, you are still going to get only Rs 1,000.

Other hidden requirements

Check for other requirements such as:

Whether the card falls under the offer category
Whether registration is required for earning cash-back
Should one apply for a new card meant only for cash-back
The period during which the offer is valid
Does the offer apply at outlets having point-of-sale terminals, or should the purchases be made only where the card-issuing bank has installed such terminals?
The products categories, which are eligible for the offer
Should cash-back be collected at bank branches, redeem them at the POS outlets, or will the amount get credited automatically in the card-holder's savings account
Using a cash-back card can be very good indeed, provided that you use the card smartly within its limitations.

As mentioned before, it is important to confirm the minimum amount to be spent to be eligible for cash-back and the maximum amount you can receive as cash-back, because if the delicate balance between the two is not struck correctly, you may be over-spending which can lead to interest charges.

These things can completely overshadow the benefits of a cash-back card.

Six Major Credit Card Mistakes

Are you having trouble getting your credit card balances under control? If so, don't beat yourself up over it - you're in the same boat as thousands of other consumers. Once you choose to change you spending habits, however, it is possible to make your debt manageable. Use these simple tips to stop adding to your existing credit card debt and start regaining control of your finances.

Not only will you never pay off your bill, but the interest rates that credit card companies charge will actually keep your bill growing every month. Instead, send as large of a payment as you can afford to. Where possible, reduce your spending in other areas to focus on paying off your credit card debt. It might be worth going without extras like cable television or new clothes for a while if it means you can sleep easier at night knowing that you'll soon be free of debt.

It may not feel like you're saving money when you increase your credit card payments, but you are. Depending on your intrest rate, you're saving an average of 10-29% per year in interest on any balance that you manage to get off your cards. That means that if you pay off an extra $1,000 this year, you're actually coming out $160 to $290 ahead, depending on your interest rate. If you're already in debt, chances are money is tight for you, so freeing up this extra money can really start to give you some breathing room in the long run. Whether you use this money to accelerate your debt payments further, start an emergency fund, or invest in your retirement, the power of compound inrest will start working for you instead of against you.

Don't Use Your Credit Card for Everyday Items Except in extenuating circumstances, you should have your budget under control enough that you can at least pay for your monthly necessities with your monthly income. By keeping required purchases like groceries and utility bills off of your credit card, you'll be taking a major step in the right direction to getting your spending under control. Consider that a $3 gallon of milk purchased with a credit card can quickly turn into a $30 gallon of milk if you don't pay off the balance at the end of the month. There's no need to incur interest charges on necessary items that you should be paying for with your monthly income

Be Wary of Credit Card "Rewards"The rewards you can earn from credit cards, while a nice perk, are worth far less than the extra interest you'll accrue if you can't pay off the money you spend to earn such bonuses. The credit card reward schemes that allow you earn points on your credit card purchases often come out to a reward of 2% or less. For example, you may receive one point for each dollar that you spend, but you must redeem 5,000 points to get a $100 discount on a plane ticket. Because the amount of interest that is charged on outstanding account balances exceeds the 2% bonus that you received, it may not be worthwhile to incur the interest charges for such a small reward.

You should also avoid signing up for multiple credit cards, regardless of the sign-up bonuses they may offer. If you already know that you don't manage credit cards well, don't give yourself more temptation in the form of more cards. It's also easier to miss a payment deadline when you have more cards than you can comfortably keep track of, and a few $39 late fees or interest payments will quickly obliterate any $100 gift card you may have received when you applied.

Once you have your credit card debt paid off, if you understand how your cards work and you trust yourself to not go into debt again, you can start using credit cards as convenience cards. As long as you pay your balance in full and on time each month, there is nothing wrong with using credit cards to avoid carrying around cash or to take advantage of rewards like frequent flier miles - as long as your purchases fit within your monthly budget, of course. Say "No" to Cash AdvancesCredit card companies employ tactics such as sending you checks in the mail as often as once a week and encouraging you to use them to pay bills or treat yourself to something nice, but only in the fine print do they mention that these checks are considered a cash advance.

The main reason why taking a cash advance is such a bad idea is that you start accruing interest the minute you take the advance - unlike with regular credit card purchases, there is often no grace period. You're also charged an automatic fee, usually around 2-4%, on the amount of the cash advance in addition to a higher interest rate than what you're paying on the rest of your credit card balance. To add insult to injury, the credit card company often won't consider the cash advance to be paid off until you've paid off your balance for your other purchases.

The best thing to do with these checks is to shred them as soon as you receive them. This way, you'll avoid the temptation to use them and prevent would-be identity thieves from snagging them out of your trash. Many credit cards will also send you a pin number shortly after you sign up for a card so that you can use your credit card to get cash from an ATM. Shred that pin number, too - cash advances are a terrible deal for consumers.

Avoid Using Your Credit Card as a Cure for Medical BillsMedical bills can be overwhelmingly expensive, especially if you're uninsured. If you're having trouble paying your medical bills, negotiate an agreement with the hospital or other company to whom you owe money. Don't add to your bills and your stress by tacking exorbitant credit card interest rates onto them. You should also consider going over your bills with a fine-toothed comb to make sure they are accurate and that you understand all of the charges.

Don't Ignore Your DebtSome people become so stressed out or embarrassed by their credit card debt that they simply stop opening their bills and pretend that the problem isn't there. While this tactic may appear to work for a month or two, it's a bad approach because while you're ignoring your bills, interest rates are causing the balance you owe to grow every day. In fact, if you miss a payment or two, the interest rate itself may even increase under the terms of your credit card agreement. Not paying your bills on time also has a detrimental effect on your credit score.

If you're feeling overwhelmed, you can call each of your credit cards and ask to renegotiate the terms of your agreement. Sometimes you can get your interest rate lowered, set up a payment plan that will allow you to pay off your debt, or even get some of your debt forgiven, all with a simple phone call. If your first call doesn't work, remember that just because one person says no doesn't mean that's the final answer. Keep calling the company back - you'll often get a different customer service rep almost every time, and talking to different people may allow you to negotiate a better deal.

Ignoring your debt can also spur debt collectors into action, and with the unsavory tactics some collectors are employing these days, you definitely don't want to do anything that might put you on their radar. Finally, don't let embarrassment prevent you from taking action; you might assume that most everyone you know has their finances under control, but some of them probably have at least as much debt as you do.

ConclusionCleaning up your credit card debt takes time and self control, but the steps outlined here aren't difficult. There's no reason that credit cards can't be a helpful, convenient tool - assuming you can learn to use them sensibly and responsibly. These tips will help you keep control of your cards instead of letting them control you.

Is your credit card making you broke?

A CREDIT card nestles a lot of hidden costs – so if you aren’t careful, your monthly statement can come as a huge shock.
Here is a checklist of reasons why you may incur unnecessary credit card expenses:

You don't pay the minimum amount due
Whether you do it knowingly or unknowingly, you will end up paying a late payment fee. This fee varies from bank to bank. If you do not pay for two consecutive months, you become a defaulter. Collection strategy then varies, depending on his risk score arrived ad from the amount outstanding, past record, individual profile/ profession. Further transactions will be blocked.
You revolve your balance
Banks give you this option to pay a minimum prescribed amount and carry forward the rest to the next billing period. In this case, you will pay an interest on the outstanding amount. But the catch lies here: when you carry a balance from month to month, there is no grace period on new purchases with most cards.
Your payment cheque bounces
You would have to bear a fee for dishonoured cheques. If you go beyond the due date, you become a delinquent case, and your risk profile shoots up. Also, all charges will be applicable – a fee for a bounced cheque, a late payment fee and monthly interest on outstanding amount.
You cross your credit limit
Your credit limit is the maximum amount that you can spend using your credit card, as dictated by your income profile. But should you decide that you need to spend more, the banks are too clever to block further transactions. Instead they let you spend, and then charge you – perhaps as much as 5% on the exceeded amount.
You transfer your balance from other cards
Some banks make an offer where you pay absolutely no interest or a very low interest, but the dream run doesn’t last long. Most banks let you not pay or pay low interest on the transferred amount for a stipulated period of about three months. Beyond that, you start paying the normal interest. So, if you have transferred your balance, pay off the dues within the stipulated time.
Other precautions you can take:

Do not withdraw cash with your credit card
Apart from paying the regular interest of 2.95%, you will also have to pay a one-time fee of about 2-2.5% for making a cash advance. Moreover, the cash advance fee is higher if you withdraw from an ATM that doesn’t belong to the bank whose credit card you hold. Also remember, when you withdraw cash, you start paying interest from there on, as against getting a free credit period.

You forget to pay your annual chargesIn case you decide not to use your credit card further and you don’t pay the annual charges, you are in for trouble. Remember, you need to get in touch with the bank and intimate them that you don’t want the card any further. Otherwise, you will unnecessarily have to pay the annual fee and a penalty, in case you cross the due date.