Credit Cards – Best Practices for Recent Grads
By: Chris Francis, Vice President, WorldPay
Before walking across the stage at graduation, college seniors often receive dozens of sample cards and promotional brochures from credit card companies prompting them to apply for and open an account. The problem is that many of these students have never used, let alone maintained, a line of credit. While credit cards offer graduating seniors the opportunity to build credit before entering the “real world,” they may also drag some inexperienced users into debt or expose them to fraud. In 2014, online credit card fraud cost victims $10 billion, according to Javelin Strategy. That number is expected to reach $19 billion by the time 2018 rolls around.
Students interested in using their new credit card to make an online purchase from their desktop or mobile device should exercise caution before sharing personal information. The rise of e-commerce channels coupled with college students’ increasing dependence on technology could begin to blur the lines between transactional and social interactions – creating a false sense of security when shopping in virtual marketplaces.
Although such safety measures could help secure online transactions, first-time credit card users should consider following these five tips to stay safe while shopping online.
Don’t bite off more than you can chew
From waiving application fees to offering special interest rates, companies often bend over backwards to ensure they are the number one choice for new credit card owners. But as enticing credit card offers begin to flood their inboxes, recent college graduates may be tempted to establish more than one line of credit. In fact, the average consumer holds roughly 2.24 credit cards, according to Experian.
While it’s possible to save money on interest fees by transferring credit card balances to a new card with a lower APR, owning multiple credit cards could spell trouble – especially for first-time users. Not only is it easier to run up debt, but moving between different credit cards could also increase a college graduate’s chances of missing a payment.
By choosing a widely accepted credit card that earns them rewards they actually value, college graduates have the opportunity to become better familiar with managing a credit card before taking on more lines of credit.
Opt for “https” websites
When it comes to online security, one letter can make a big difference. In most cases, website URLs are accompanied by one of two prefixes – “http” or “https.” Through the use of a Secure Sockets Layer (SSL), websites with the “https” prefix can safely transport data from a user’s browser to the website they are trying to connect to. This SSL Digital Certificate is often denoted by a padlock icon in the browser’s address bar that turns green once the digital certificate is validated.
Before sharing their credit card information to complete an online purchase, consumers should scan the website for an “https” designation. The added layer of security may keep fraudsters from getting their hands on any personally identifiable information.
Look for payment authentication logos
Google’s Trusted Stores checkmark is one of many payment authentication logos that recent college graduates can look for to gauge a company’s commitment to fraud prevention. Not only do such logos represent an important step in the fight against fraudsters, but they also make consumers feel more secure. According to Worldpay’s Online Payment Journey report, 51 percent of U.S. shoppers would be more likely to buy from a website that displays payment authentication and digital certificate logos on the homepage.
Use credit cards for online transactions
Recent college graduates who use debit cards for online transactions may want to reconsider their decision. As it currently stands, consumers face a maximum liability of $50 for fraudulent credit card activity. Debit cards, on the other hand, leave users without any sort of protection if the lost or stolen card is not reported within 60 days. By sticking to credit cards for online transactions, college graduates may increase their chances of avoiding credit card fraud.
Know your credit score
From securing a low interest rate to qualifying for a mortgage, a credit score plays an important part in a student’s transition from college to adulthood. Yet a spring 2016 survey by LendEDU found that 72 percent of college students didn’t know what their credit score was. By paying off their credit card each and every month, recent college graduates may begin to build a strong credit score that will benefit them moving forward.
In 2014, fraudulent online transactions accounted for nearly half of all U.S. credit card fraud, according to Aite Group. With these best practices in mind, students fresh out of college have the chance to keep their personal information under wraps even as they take advantage of online deals.
About the Author
Chris Francis is the Vice President of Market Development at WorldPay.
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