Financial Red Flags and Scams to Watch Out For
While credit cards offer great benefits, they are also a primary target for scammers. Being vigilant is your best defense. Scammers often target seniors with schemes designed to create panic and urgency. Here are some of the most common red flags and scams to be aware of.
Scam 1: The Urgent “Account Security Alert” Phishing Scam
You receive an email or a text message that looks like it’s from your bank or credit card company. It might say something like, “Suspicious activity detected on your account” or “Your account has been locked for security reasons.” The message will demand that you click a link immediately to verify your identity or unlock your account. This is almost always a scam.
Warning Signs: The link will take you to a fake website that looks identical to your bank’s real site. When you enter your username and password, the scammers steal your login information. They may also ask for your full card number, expiration date, and security code.
How to Protect Yourself: Never, ever click on a link in an unsolicited email or text message about your financial accounts. If you are concerned, close the message and contact your bank directly. Either call the phone number on the back of your credit card or open a new browser window and type in the bank’s official website address yourself. To protect yourself from scams and for consumer information, consult the Consumer Financial Protection Bureau (CFPB) and the FTC.
Scam 2: The “Bonus Rewards” or “Interest Rate Reduction” Phone Call
The phone rings, and the caller claims to be from your credit card’s rewards department. They congratulate you on being a valued customer and offer you a special opportunity to earn bonus rewards or permanently lower your interest rate. All you need to do is “confirm” your personal details, including your full name, address, and, most importantly, your credit card number and the three-digit code on the back.
Warning Signs: A legitimate company will never call you out of the blue and ask for your full credit card number or security code. They already have that information. This is a tactic to get your details for fraudulent use.
How to Protect Yourself: Hang up immediately. If you are curious whether the offer was real, call your credit card company using the official number on your card. Do not trust the number provided by the caller or your phone’s caller ID, as these can be faked.
Financial Mistake: Chasing Rewards You Don’t Need
A common mistake is applying for a card with a huge sign-up bonus that requires you to spend thousands of dollars in a few months. If that spending amount is far more than your usual budget, you might be tempted to buy things you don’t need just to get the bonus. This is a trap. Overspending will always cost you more than the value of the rewards. Stick to cards with spending requirements that you can meet comfortably through your normal, everyday purchases.
