Credit CardsWhen I used to work in customer service it always used to amaze me when people on the phone would walk out to their cars to get their credit cards. These same people were invariably the ones who were calling in to change their number because their last ones were stolen. While it’s easy to chuckle at sometimes obvious mistakes, I recently left my American Express at a McDonalds drive through.

D’oh!

Someone was kind enough to notify me that my card had been stolen by charging $45 worth of gas. This is the second time I’ve had this happen and Bank of America has been (mostly) good about handling it. It’s a big pain in the butt to deal with but I’ve put together some tips and thoughts on how to minimize the impact of credit card theft or even human error.

Read the fine print.

Credit card companies may offer credit protection services but these are rarely worth the extra expense’”a good card will waive all fraudulent charges. Even if they don’t legally your maximum liability is $50, the usual annual fee for credit protection services. Check your terms of service to see what your issuer’s policy is.

Be Careful with Check Cards

Credit cards can wreak financial havoc in undisciplined hands, but if you don’t overspend, I recommend using them for everything. If a check card is misappropriated the money comes directly out of your bank account and could leave you short of funds while the situation gets resolved. Banks can be sticklers about overdraft charges even when it isn’t your fault.

I definitely use a credit card for all online purchases. The only entities who know my bank account are the companies that deposit money, utility companies and ATMs.

If I were Smarter I’d Use TWO Cards’¦

I’d use one credit card for automated recurring payments that stays at home and another for spending out of pocket. That way I’d limit risk to the carried card and not have to update all of my online accounts if it got lost or stolen.

I’m not 100% convinced I want to do this just yet, though I can’t argue with the logic. But from personal experience, whenever I try to get too tricky with juggling bank accounts I usually get burned.

Maintain a Good Relationship with Your Bank

Your primary card should always be paid up and kept under limit. Customer service with financial institutions is proportional to your history of on-time payment and your net worth. Sadly, the people who need late fees and overdrafts waived the most are usually slapped with the harshest penalties.

Stay On Top of Your Statements

This means reading every line, every month. I check mine periodically between statements to see what transactions have posted. If you catch something within 30 days of your statement date you’re usually safe. But if a strange transaction shows up and you miss it for some reason you’ll have a tougher time convincing the issuer that it wasn’t you.

Have Those Customer Service Numbers Ready

It may not be a sign of great faith in humanity to keep the numbers for your credit card’s lost or stolen department in your cell phone, but having it handy it saves the frustration of having to look up the number when disaster strikes. This cannot be emphasized enough when travelling internationally.

There are lots of smart tricks for protecting your information, but there are no guarantees. You card can get stolen or someone can get the number by taking a picture with their cell phone. Unsecure wireless connections in retail stores may leak numbers as well. With all the ways there are to glean credit card and bank information, the best protection is to be vigilant.

I’ve been lucky that every time has been relatively painless (recent loss of rewards points notwithstanding) but credit card theft can be a real nightmare. The comments are open for you to share your experiences and advice.