Don't let your credit cards turn into a headache. B Rosen / Flickr

This is a post by BargainBabe.com writer Yazmin Cruz.

With recent breaches of personal data security from Sony, Michael’s, and a Dallas-based email management company, consumers must take steps to keep their information safe. Think you’re untouchable? Take these easy six steps to make sure.

1. Monitor accounts – If you notice something out of the ordinary in your bank or credit card statements, give the company a call. Keep an eye out for charges in other states, online transactions, and gas charges. These transactions are the most commonly made by hackers because they require little, if any, personal interaction, making them an easy way to test a stolen card.
2. Change your passwords – Keep your online accounts safe by frequently changing your passwords and making them as strong as possible by using allowed characters and numbers. Make sure to use different passwords for each of your accounts and most importantly don’t share your passwords with anyone. (A good way to keep passwords safe is with a password app or manager.)
3. Change your PINs – Like passwords, these numbers need to be kept in a safe place and not in your wallet. Avoid identity theft by knowing what should and should not be in your wallet. Call your bank and credit card company to change them when necessary. Do not use birth dates as PINs as hackers tend to attempt these numbers first.
4. Report phishing emails – If you ever get an email asking for your username and password, do not respond. Keep in mind that most banks and credit card companies do not ask for such information via email. Instead forward the email to the bank or credit card company so they become aware that their customers are being targeted.
5. Check your credit report – Make it a habit to check your credit report every year to keep your finances clean of any mistakes. You can get a copy of your report online. It’s free once a year.
6. Know your rights – Buying identity theft insurance is pricey and not necessary. Under federal law, if unauthorized charges are made with your credit card, the maximum amount you can be liable for is $50, that’s if you report it after the charges have been made and not within 60 days after the billing error. If the charges are made after you report the card lost or stolen, you have no liability.

I got the idea after talking to a friend who had to cancel her credit card because of fraudulent charges. (This was not the same friend that had her credit/debit/ATM card number skimmed.) My friend didn’t have a back up for some reason and was forced to go without a credit card for about a week.

She was astonished at how different it felt to make regular purchases – with cash. At Target she picked out a gift for her grandson’s birthday that came to $61. She balked. $61? In cash? She would not have thought twice about swiping her plastic.

My friend’s experience made me wonder. Is it easier to stay on budget with cash? I pay my bill in full every month so this experiment is not about learning to spend within my means. It’s about spending less.

I rely heavily on my credit card because I spend cash so easily. In fact, I try to limit my ATM usage to one withdrawal of $100 at the beginning of the month. So there is a chance this experiment could go very badly.

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Don Hankins/Flickr

This post is brought to you by Mint.com, a destination for budgeting software.

A friend needed quick advice after discovering – gasp! – fraudulent charges on her combo credit/debit/ATM card. She wrote:

Someone in Massachusetts has taken money directly out of my checking account for shoes and McDonalds! F—–s! I will get the money it back – eventually – but I’m still mad. It has woken me up. I HAVE to stop using an atm/debit card. It’s just an accident waiting to happen. Any suggestions Ms. Bargain Babe?

Yes! Here are seven steps to take if your identity has been stolen.

1. Call your bank immediately and cancel the card if fraud is evident.

2. Call any one of the three credit reporting agencies and ask them to put a fraud alert on your credit report. TransUnion is at 800-680-7289. Equifax is at 800-525-6285. Experian is at 888-397-3742.

3. Call your other credit and debit cards and check for suspicious charges. Ask the company to raise the identity theft awareness level and be very wary of new purchases, especially ones out of state or abroad. Internet purchases often show up as out of state, so ask if they can distinguish in-person charges from online purchases. For example, my friend can prove that she wasn’t grubbing on McDonald’s in Massachusetts so she will be able to get her money back. If you have travel plans, call and make them aware. (This is wise anytime you plan to use your card abroad.)

4. Request a copy of your credit report to make sure no new accounts have been taken out in your name. You can get one free each year through the FTC.

5. Try to figure out how your identity was stolen. It’s possible the thief has not used all the information s/he has. Change your passwords for all your banking accounts and others that may have been compromised.

6. Consider purchasing identity theft insurance or monitoring protection. Shop around to find what fits your needs and budget.

7. The FTC recommends you file a police report in the area where the theft occurred and you file a complaint with the FTC. You can start both of those steps here.

UPDATE: My friend took some of these steps and found out how her information was stolen.

I found out a little more about the theft of my account from the bank’s claims division. They believe I was a victim of the latest crime craze, atm skimming. There are all these crazy devised that people stick right on top of card readers on atms to capture your info. According to claims person, thieves most often used the cards for food and gas. (I guess my person was a greenie since she/he bought shoes instead of gas.) Turns out my thief kept trying to use my card after I stopped it. She tried four times at a Dunkin Donuts before she gave it up. I decided it was a she. Boys don’t buy shoes at Off Broadway shoes. Do they?

Probably not, but the important thing is to protect yourself from further identity theft. If the thief has access to only one account and you close it, fine. But if they have access to other accounts that you are not aware of (perhaps the thief has not used them yet) and you do not take steps to protect yourself, you could become a victim again.

The FTC has a helpful site about identity theft which has more info on what to do if you are a victim and how businesses can protect customers.

The blog Man vs. Debt came up with 33 things to prevent identity theft, including some of my suggestions above.

1. “Female” versions of products are often more expensive. Consumer Reports did a study and found that products with his/her versions, like shaving cream, deodorant, and razors, perform the same but cost $1-2 more for the version targeting women, Laura said. All that pink packaging is cute, but not worth an extra dime.

2. A coupon toolbar saves time. Research shows more people do at least two online searches before they buy. First to find the product and then to find coupons for the product. Laura likes the coupon toolbar at Dealio.com, which automatically finds coupons when you search for products on Yahoo, Bing, or Google. Having a toolbar helps you get more value out of a single search.

3. Certain debit cards earn cash rebates. Laura says she earns 3-4 percent on the account tied to her debit card. To earn this high interest rate, you generally have to do five things. One, swipe your debit card 10-12 times a month. Two, set up direct deposit into the account. Three, use the bank’s online banking program. Four, get statements by email not snail mail. Five, bank locally. You aren’t going to see any of the major banks offering this perk.

But do the benefits of using a high-interest debit card surpass credit card perks? “Totally,” Laura said. “It’s way better to get 3-4 percent interest than credit rewards.” What about not building your credit history by using a debit card? “The people with the best credit scores only use 8-10 percent of their credit capacity every month. By using a debit card 10 times, you are getting the best of both worlds.”

Still interested? Go to CheckingFinder.com, plug in your zip code to find a local bank, and compare offers. The banks can afford to give you this interest rate because they are making money on the interchange fee. Every time you swipe your debit card, retailers pay about 2 percent of the sale, Laura said.

This deal works best for people who are comfortable banking online. Laura recommends using a high-interest debit card for small purchases between $10-$50 and a credit card for bigger charges. She makes the most of this deal by transferring 3-4 months of savings into her high-interest account. But only do this if you can stop yourself from spending your savings!

I just checked for my zip code and one bank is offering 4.09 percent interest on balances up to $25,000. That’s a far cry from the 1.25 percent interest rate ING Direct is offering for a 18-month CD.

This 4:29 video follows filmmaker and director Karney Hatch as he fights Bank of America over his overdraft fees, something I’ve been writing about. I highly recommend it!

httpv://www.youtube.com/watch?v=YjH4Us0n0QY&feature=player_embedded

Related:

Debit cards are a cash cow for banks

Banks agree to lower/eliminate bank fees