Tips on Choosing and Using Credit Cards

Credit cards are an important part of many consumers' financial lives, but it helps to understand how to make the most of these products and avoid potential pitfalls. That's why the Winter 2013/2014 issue of FDIC Consumer News features practical tips for choosing and using credit cards. Additional articles offer suggestions on fraud prevention, saving money at tax time, and managing a home equity line of credit when interest rates are rising. The newsletter also includes a quiz on FDIC insurance. Here's an overview of what is in this edition:

Be in charge of your credit cards: For consumers to qualify for a credit card with the best features, the FDIC newsletter points out the importance of ordering free credit reports and correcting any errors. The newsletter also recommends shopping around and comparing product terms and conditions – particularly the Annual Percentage Rate and card fees. Once a consumer starts using a card, a careful review of the monthly statement -- looking for billing errors and other problems -- is recommended. Any problems should be quickly reported to the card issuer. Billing disputes and error resolution problems and processes were the most common complaints the FDIC received in 2012 and 2013 related to credit cards.

Protect your personal information and your money: News reports about frauds and thefts -- including those involving major security breaches at large companies such as retailers -- can be scary. While federal laws and industry practices generally limit losses for unauthorized transactions involving bank accounts, debit cards and credit cards, it pays to take some reasonable precautions. The FDIC newsletter offers 10 ways consumers can protect themselves.

Save money and avoid problems at tax time: The FDIC newsletter says to be on guard against tax-related scams, such as dishonest preparers or fraudulent e-mails falsely claiming to come from the IRS and attempting to trick taxpayers into revealing valuable personal information. The newsletter also discusses strategies to consider if you're expecting a refund or you owe money on your taxes.

Test your deposit insurance IQ: Do you think you know how FDIC insurance works? Take our quiz and find out. And if you need to do a little extra homework -- to be sure your deposits are safe in the unlikely event of a bank failure -- there are important resources available from the FDIC.

Prepare for rising payments on a home equity line: A HELOC -- short for a home equity line of credit-- is a way to borrow up to an approved credit limit using your house as collateral. If rising interest rates cause your HELOC payments to increase, you could damage your credit score and even lose your home if you don't repay your home equity line as agreed. If making future HELOC payments will be a strain, the FDIC newsletter suggests options to consider.

The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information about financial matters, free of charge. The Winter 2013/2014 edition can be read or printed at