High debt is often a problem for holders of store credit cards, since they generally charge much higher interest rates than bank-issued cards. Unless you plan to pay off the full amount of the balance each month, expect high finance charges, likely enough to render obsolete any cardholder incentives you may have received.

Having a different card for each store you shop in may earn you some store rewards here and there, but holding so many cards does not look good to creditors and thus, your credit score is likely to take a beating. Consumers should balance their card portfolios carefully and only apply for cards with genuine value, according to the National Retail Federation's senior VP Mallory Duncan.

The reason why stores are able to offer such huge incentives to their cardholders is because they reap huge savings on the transaction fees that Visa, MasterCard, Discover, and American Express charge. Visa and MasterCard charge a fee of 2% for each transaction, which comes directly out of the retailers' bottom lines. When a retailer co-brands with Visa or MasterCard, often times that fee is halved. When they offer their own independent card, the retailers can avoid the transaction fees altogether. While some of these savings are passed on to their customers, consumers should still exercise sound judgment when offered a new store credit card. More is not always better.

Most would tell you that tearing them up into several pieces and tossing them in the trash is sufficient. But recently, John Crudele of the New York Post, a la Cockeyed, decided to test this method of application disposal to see how effective it truly was against fraud. In his column Tearing Through Credit Cards' Security Measures, Crudele describes step by step how he tore up his application into several pieces, taped the pieces back together, filled out the application using a different address, and still received a new credit card with an $18,000 credit line. Somehow, Cockeyed was able to get past Chase while Crudele was able to sneak through the cracks at American Express. It makes you wonder just who exactly is receiving these applications and what kind of training they get. In any case, both Cockeyed and Crudele suggest using a cross cut shredder, since tearing up the application by hand obviously does not work.

Another option is to opt out of credit card solicitations altogether. The three national credit bureaus have set up a toll-free phone number for consumers to call to opt-out of further credit card solicitations with one phone call. Just call 1-888-5-OPT-OUT and follow the instructions. In a week or two, you'll receive a letter in the mail. Just sign and return it and you'll be taken off their lists forever. Use of this toll-free number is endorsed by the Federal Trade Commission. See Sharing Your Personal Information: It's Your Choice for more information.

Grasek estimates that BofA's annual earnings could get boosted by as more than $70 million if BofA had its own card payments network. This is because of savings realized on transaction fees. Grasek estimates that BofA could save approximately 0.8%–0.9% per transaction, which may total $240 million to $270 million annually, based on BofA's $302 billion credit card volume in 2005. Another $74 million in savings would be realized from debit card transactions. Annual operating costs are operated at $245 million to $270 million.

MSNBC: BofA ponders card to rival giants

Some warning signs of this type of scam include a company who charges you fees before they do anything for you. Legitimate credit repair companies will consolidate your payments and reduce your interest rates before they charge you anything. Also beware of any company that is not forthcoming about what you could be doing for yourself for free. They only want your money, not your peace of mind. Also watch out for companies that discourage you from contacting credit bureaus personally, that encourage you to dispute every entry on your credit report, and that advise you to create a false identity with an EIN instead of your Social Security number.

The truth is only time, consistent repayment of your debts, and new conscientious activity will repair your credit. For some reliable methods of repairing your credit yourself, see the FTC's article, Credit Repair: Self Help May Be Best.

The numbers in the skimmer can be downloaded into a computer and emailed anywhere across the globe. They are then used to make fake credit cards that are used by thieves in Europe, Asia, Latin America, and the US. Skimming is responsible for over $1 billion in losses each year.

Skimmers can also be placed on some older ATMs so that when you swipe your own card, the information is stored in the tiny bug and then retrieved at a later date by the scammer. To protect yourself, keep an eye on your credit card bills. Watch for any unusual activity and report it immediately. Also shred all your statements so that the numbers cannot be stolen.

When out and about, keep a close eye on your credit card as well, and report any suspicious activity to the Federal Trade Commission.

The first method involves a similar scam to the phone fraud scam described in yesterday's post. An e-mail that appears to be from a legitimate credit card company is sent to the unsuspecting potential fraud victim. The e-mail requests the person to click a link and verify personal information, usually in response to feigned suspected credit card abuse. Most credit card companies now state clearly to their members that they will never request this type of information via e-mail.

The second version of this scam involves e-mails from credit card companies, banks, or other financial institutions. The letter requests the reader to click a link and provide information such as your Social Security number, your mother’s maiden name, or your birth date. These items are then used to assume your identity and set up fraudulent credit card accounts in your name.

To avoid these scams, never reveal any information after following a link in an e-mail. If you think the e-mail is legitimate, go directly to the company’s website by typing the URL into your browser's address bar rather than by clicking the link. For more information on phishing scams, visit the Wikipedia.

The person on the phone with you is not a fraud specialist from Visa or MasterCard. But, this person calling already knows something about you. They may have your billing address, the last four digits of your credit card from a receipt, or even the entire credit card number. So they may also ask for an expiration date or a billing zip code.

While this scam usually occurs over the phone, there are also Internet versions, so beware. Never give someone information about your credit card statement or billing history over the phone or the Internet. Bottom line: a credit card company would not need to ask for this; it would already have it. Hang up and report the call to the credit card fraud reporting department. For a sample phone call from one of these scammers, visit Urban Legends.

Scam #1 is about secured credit card marketing.

These scams start with an offer for credit that sounds too good to be true. They may tell you that regardless of your past credit history, you can get a large line of credit. It may promise that all you need to do is send in a simple form or call a listed number and you will get your credit card.

Secured credit cards are those that offer you a line of credit based on an amount that you deposit. Basically, if you deposit $500, you have up to $500 in credit. This can help you to rebuild damaged credit over time, as your secured card can be transferred to an unsecured credit card with good payment history.

But too many companies try to take advantage of this idea. You can tell a fraudulent offer by a few details. First, if they require you to call a 900-number that charges you for each phone call, this is probably a scam. Second, if the ad leaves out important information, such as security deposits, monthly fees, high interest rates, or eligibility requirements like income or age, they are probably trying to lure you into applying and paying money you don’t know you have to pay.

To avoid these scams, look for details in the ads you receive and avoid those that leave out important information. Also never dial a 900-number to follow up on an offer. Doing so could cost you a lot of money, even for just a two-minute phone call. If you have any doubt about the offer you receive, contact the Federal Trade Commission. For a list of lawsuits against fraudulent companies, visit Crimes of Persuasion.

One of the advantages being touted by the new system is scoring consistency across credit bureaus. Currently, your credit score will usually vary from one credit bureau to the next. A common algorithm should make the scores consistent across the board, right? Well, not exactly. Just because all three bureaus will be using an identical scoring algorithm does not mean that the results will be the same. There will still be discrepancies between scores from different credit bureaus because the data that is plugged into the algoritm differs from one credit bureau to the next. Some creditors report to one bureau. Others will report to two or all three. So a consumer will have a different credit report, and therefore a different score, from each of the three bureaus. This will still continue, even under the new VantageScore model.

What's more is that the vast majority of lenders have been using Fair Isaac's FICO credit scoring model for decades. A switch to the new VantageScore model is unfeasible and unlikely. Perhaps the 501-990 model put into the context of a typical academic grading system is a bit simpler to understand, but in fact, it's all quite arbitrary. For lack of a better comparison, I find this somewhat analogous to the United States government attempt at metrication by replacing the standard measurement system of feet, miles, gallons, etc. with the decimal-based metric system.

Bottom line: Admittedly, this is a great PR stunt by the credit bureaus to get us consumers to buy their new scores, but in truth, it doesn't seem like it's worth all the fuss. Just because the scoring system is changing doesn't change your credit history. Bad credit is still bad credit; good credit is still good credit; and one foot still equals 0.3048 meters.

More recently, Visa issued a warning to retailers that a certain version of some Fujitsu debit card transaction software may be storing sensitive customer data, including PIN codes. Fujitsu Transactions Solutions' customers include Best Buy, Staples, and ... OfficeMax. Although, it is unknown whether or not these retailers are using the allegedly faulty version of the software. Could Fujitsu actually be to blame for the debit card fraud?

Neither OfficeMax nor Fujitsu are taking responsibility for the security breach. Fujitsu claims that no sensitive data could be stored by its software alone; additional tweaks would have to be made to the programs. OfficeMax claims that they had found no evidence of any data theft on their end. So the mystery continues.

Most likely, the breach will be traced to some source in due time. Meanwhile, it is baffling to see that there could possibly be such a huge crack in the system of debit card security. Especially with identity theft becoming more and more prevalent, one would think that retailers and software developers would take extra precautions to ensure that their customers were being taken care of. Ultimately, the responsibility lies with the retailer. No matter at which exact point in the chain the security breach occurred, it is the retailer's responsibility to seal these cracks. They are the ones with whom the customer has the relationship and they are the ones who will take the brunt of the poor PR should something like this happen. I know one thing for sure: I won't be using my check card at OfficeMax any time soon.

This risk however does not bother LAMoneyGuy, who is planning to refinance his car loan by obtaining a 0% balance transfer credit card. Admittedly, the 0% balance transfer arbitrage risk for him is minimal, since he currently has enough money in his savings account if he needs it in 12 months. Some more interesting thoughts on this are at Blueprint for Financial Prosperity.

So if LAMoneyGuy can do it, shouldn't you too? Some advice — at Credit Card Blog, we tend to be risk-averse. In fact, we are extremely risk-averse. We would never advise playing the 0% balance transfer arbitrage game unless you have in hand some emergency cash, as LAMoneyGuy does. You never know what might happen with your cash flow situation several months into the future. Should it dry up for some reason, you could be left with some pretty hefty interest on your new 0% balance transfer card a year from now. As usual, be aware of the risk and play it smart, or don't play it at all.