The $7,600 credit card balance that the family are carrying, on which they are c
ID: 2765751 • Letter: T
Question
The $7,600 credit card balance that the family are carrying, on which they are currently making the minimum payment due, has a credit limit of $38,000. The family has just received a letter from the credit card company offering to increase their credit limit to $76,000. the family has also read several articles on identity theft and are concerned with protecting themselves from this fast-growing crime. they currently receive their mail in mailgate at their house-gate.
Should the family accept the increase in the limit on their credit card even if they do not anticipate using it?
Advise the family on steps that they can take to reduce their exposure to identity theft.
Explanation / Answer
1. The credit card companies often increases your limit proactively. That means you get bigger line without having to ask. They want to lend money to profitable customers and keep profitable ones from borrowing from other lenders. When you open the account the bank has little informations about you. They makes an approval and credit line decisions based solely upon your consumer report . The bank will always set lower limits to new accounts to protect the self from losses until they get to know you better. As you use the account , they learn more about how you handle money. They gain valuable insight into your ability to manage debt. The company will often proactively increase credit card limit to gain a greater share of wallet for their most profitable accounts. The high the line, the greater chance they can capture and control detailed information about you that they never have to share. The line determines the total amount of charges that can be outstanding during any single billing period . You can continue placing charges until you reach the maximum amount. After that they will decline all the future charges until you pay down the portion of the outstanding balance and create an open to buy amount in your account.
To accept the increase in limit is purely depends on the customers. As mentioned above initially all credit card company keeps the limit at a lower level then proactively increase the same based on the usage as well to gain more profit on spending of the customers. If the family is not intended to accept this they can send the letter to the company and can maintain there previous credit limit. But in practical we see this senerio to happen very less , usually people accept the increase the credit limit even they do not intend to use that much.
2. 1. Incorporating a few practices into your daily routine can help keep your cards and account number safe like keep your account number, expiration dates and phone numbers report fraud for each company in secure place . Don't let your card to anyone even your kids or room mates
2. Don't give your account number to anyone on the phone unless you have made the call to the company you know to be reputable.
3. Carry you card seperate from your wallet . This will minimize your losses if someone steals your wallet.
4. During a transaction keep your eye on your card . Make sure you get it back before you walk aways.
5. Never sign a blank receipt .
6. Save your receipt to compare with your statement
7. Notify your card issuer if your address changes or if you will be travelling.
8. Don't write your account number on the outside of your envelop.
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