5 risks you shouldn't take with your credit cards © Corbis

The Basics

5 risks we take with credit cards

The potential for going deeply into debt isn't all that makes plastic hazardous to your wealth. Other, more-subtle temptations can also cause trouble.

[Related content: banking, credit, credit cards, credit score, teens]

By CardRatings.com

When you think about the words "danger" and "credit card," the first thing to pop into your head is probably debt. The over-your-head kind of debt that can happen when you're not paying attention to how much you're spending.

The cost of credit card fraud

But debt is only one danger to avoid when it comes to your credit card.

What are your credit scores? Get a quick estimate

Here are a few other dangerous things you might be tempted to do with a credit card:

1. Give it to your kid

The inherent danger involved with giving your offspring a credit card is nothing new to parents. But the Credit CARD Act has created some new situations to think about.

The law prohibits card issuers from giving credit cards to anyone under 21 unless that individual has proof of enough income to pay off debt. As a result, some parents are co-signing on cards for their under-21 kids or adding their kids as authorized users on their own credit cards.

A young person with Mom's or Dad's credit card can be dangerous unless you have a plan. Make it clear that your kid needs your permission to make a purchase with the card. Stress that the card is an alternative to carrying cash -- not a way to get something that there isn't money to pay for.

Make sure you monitor credit card purchases, just in case that plan isn't being followed.

2. Give it to an employee or contractor

One of the most-famous examples of this situation involves Kim Kardashian. She was hired as a "consultant" for R&B singer Brandy Norwood. Kardashian claimed that Norwood's mom gave her a credit card to make purchases and allegedly went on a shopping spree with her client's credit card. The damage? $120,635.82.

If you run a business and you need to give a credit card to an employee or contractor, choose a card that allows you to set spending limits. Another option on the horizon is MasterCard's inControl, which lets you set a limit on your card. When a cardholder reaches the limit, the card is rejected. But the best step is to monitor your credit card statements and know what your balances are.

3. Use it on a website that's not encrypted

You must make sure you're on a secure, encrypted website before you key in your credit card number. Secure websites have encryption software designed to prevent identity theft.

When you're on a secure website, you'll see a lock icon in your browser's address bar and "https" in the URL. Note the "s" at the end of "http."

Continued: Don't spend all the way up to your limit

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30Comments

Newest

12/29/2010 7:44 AM

What's new about this article that I do not already know? Any person with a good brain knows not to spend up to the limit, give the card to someone who will spend like crazy, etc. I have never been in debt or have any problem with my credit cards since I got my first one roughly 18 years ago.

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NVanHiker

11/26/2010 10:11 PM

"What if you suddenly need a new dishwasher...?" You're kidding, right?

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bewilderedbyitall

11/26/2010 3:53 PM

This article was as useful to people in REALITY as their prior slogan with filler article that the recession was over in 2009. Yah, sure. Zippity do dah, MSN, that's some in-depth, accurate reporting--NOT.

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rapper44

11/26/2010 11:34 AM

I have cards that I don't use regularly. I may have a balance on it that I am paying down, but I don't want to charge more on it so I shred it.

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memyselfI

11/26/2010 9:28 AM

And I really like the way msn changes the heading on a story to make you think it's a new one, When in truth its the same one that was there yesterday or a few days ago. AOL is now my home page and Firefox is my browser, I only come to msn to check my old hotmail account and when I have extra time to look around at other sites killing time.

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sthinice

11/26/2010 8:58 AM

The one thing you have to do when cancelling a card is request a letter that reads at your request we closed your account.

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eagle20Fund

11/06/2010 11:05 PM

First of all, a credit card is NOT extra money; it is a "convenience". I only use cards that give me something in return, and I never have an outstanding balance... I pay them NOTHING except for the merchandise I purchased, and I reap the rewards. Lets just say, use "common cents"...

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Stephen Batchelor (batch16)

10/28/2010 12:12 AM

MSN seems to be marching toward a new low with the constant dumbing down of their home page and included articles. When I am enticed to open up an article, I often click out early when I see that there's no real news in it.

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GwenH.

10/27/2010 11:32 PM

@thecar-man & anyone else who is interested,

Well, MSN doesn't like me "spamming". Anyways, there is a phone number and a website that I wanted to give you. You can "opt-out" of those pre-approved credit card offers in the mail =) It's good for up to 5 years. There is also an option to write the major credit bureaus a letter to opt-out: Experian, TransUnion, and Equifax, Inc. Hopefully, it'll accept the link this time =P http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt063.****m LOL okay, that starred out part is: "s", "h", and "t" no, I wasn't trying to curse! =(

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GwenH.

10/27/2010 11:08 PM

I have a tip that may be helpful to someone out there =) Always write your bill out for over the minimum amount. If you pay the minimum only, the majority, if not all, will go straight to the interest. Little to none will actually go to the principal (the debt). Therefore, you may never pay it off! It doesn't have to be a drastic amount. I pay anywhere from $5 - $30 over the minimum a month. It depends on what extra I can afford to put towards it. Hope this helped =)

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dont cancel your cards

10/27/2010 11:07 PM

Cancelling/closing your cards actually hurt your credit score, because that can mess with you debt ratio more. Example, you have 25k in credit card debt with a credit limit of 50K - 50%. If you close out an card with a 10K limit now you are looking at 62.5%. Think before you cancel.

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pkd338

10/27/2010 10:49 PM

Hmm...maybe there aren't any "real tips" because credit cards aren't that confusing. What's the point of bashing an article that contains all the info is should about the subject matter? I mean, really, what more should it say?

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henryb

10/27/2010 9:43 PM

After attempting for 12 tries to assign a user name that may be appropriate to catch a viewers attention to underscore msn's lack of attention and after being being rejected 12 times I would ask thise who feel disenchanted with msn to read on... Kudos to those individuals /comments who "get it' and suggest that msn doesn't and not only wastes white space but moreover is asleep when entities such as "dazzle smile" - (ring a bell to those that have been exploited by msn and that entity for about a year and a half )have been mugging those on this website

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Kevin phoenix

10/27/2010 9:40 PM

Is it a need, or want?

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quellqwest

10/27/2010 9:30 PM

who writes these articles? Maybe an eight grader in a finance class? Basic, boring and most of all USELESS> Maybe I am a moron, because I fall for the tag, and am always disappointed. MSN needs to get some new writers with valid info. UGH

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Baff1ed

10/27/2010 9:30 PM

At first reading I thought, great advice, MSN

. But then I began to think, these practices are more common than we would like to think. Perhaps redundant for most, but you would be amazed at how many find it enlightening. Sad, but true.

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beto604

10/27/2010 7:21 PM

Hey creditfail. I am a car dealer finance manager. Anyone with a 740 score does not have to use that dealer's financing. that person could easily get their own financing elsewhere. If perchance they did sign up at that ridiculous rate they could also re-finance the next day. In fact, in most cases I can get that person a better rate than they can get on their own. I do this every day. If you think you were burned by some car dealer (which I doubt) you paid a high rate because you deserved it.

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Someone (grtytsrk)

10/27/2010 6:27 PM

Well we know big a$$ Kim Kardashian doesnt know to handle money or cards so whats new?

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Bing Is Junk

10/27/2010 6:16 PM

Sadly, this isn't the most retarded "article" I've seen on MSN. I think it's time to make Google my homepage. The little pictures they make with the letters are far more intelligent and interesting than the worthless junk on MSN.

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CreditFail

10/27/2010 6:05 PM

LOL I really don't know why I keep getting stringed into these sort of articles expecting different results. I guess I'm a fool for thinking that MSN or any other useless website provides real credit advice for those who'd like some "actual" tips on credit. Well stated these advice tips are for mentally challenged persons who Citibank decided to "pre-approve". Hell, I've even seen them extend credit to dead family members and pets! Credit could be a powerful tool in the right hands like these greedy corporate hogs and life sucking elitist parasites that suck you dry for everything your worth. Car dealers are the best example of these so called human beings. You could be sitting on top of a 740+ score and walk out with 13% simple interested loan for your Toyota Corolla that you'll be paying for 7 years.

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