With Christmas just around the corner and many of us already planning our Christmas shopping lists, Peter Turner, Managing Director at Experian Consumer Services, offers us some insight into savvy Christmas shopping to ensure we stay safe online and don’t get caught out by online fraudsters and also to help us ensure we properly manage any credit we need to make the most out of our festive spending.
1. Online shopping:
A huge amount of people now do most of their Christmas shopping online, according to insight from Experian.* The first big spike of the year in online retail visits is Cyber Monday - the first Monday of December - which saw almost 85 million visits going to retail sites in 2011, up 18% YoY. Boxing Day is always the biggest shopping day of the year, 2011 saw the single biggest shopping day ever online with over 96 million visits going to retail websites.
- If in doubt, don’t click: Online shopping is now second nature to many people. But don’t let that give you a false sense of security. Research from Experian shows that one in four people (26 per cent) never check for a website’s security padlock, even when making purchases, which could leave their payment details and personal information unsafe. If a website looks dubious, an online offer too good to be true, or an email with its subject line and content conflicting with what your bank would normally send you, don’t click Check online to see if other people have encountered what might be a scam or virus, and contact your friend or bank to see if they the email is legitimate.
- Stay savvy online: Research from Experian CreditExpert has shown that more than 12 million pieces of personal information were illegally traded online by identity fraudsters in the first four months of 2012. If you do sign up to new websites be sure to use a separate password to the one you use for any important accounts like your bank or email. Avoid using dictionary words (20 per cent of us use the name of a pet as our password) try to keep passwords at least eight characters in length – 10 or more is preferable. The longer the password, the harder it is to crack.
- Keep an eye on where your details appear: If personal information falls into the wrong hands, within minutes, the data can be used to access your accounts, and can be bought and sold in underground forums around the world. Protect yourself with a service like CreditExpert’s Web Monitoring, which alerts members by text or email at the first signs that their details have been compromised.
- Fraudsters: According to insights from Experian, there is a notable rise in fraud during the run up to Christmas. Fraudsters need to fund their Christmas spending, too. That means they have to exploit every opportunity they can, which means consumers need to be particularly vigilant. Keep an eye on your credit report, which is a complete overview of all your credit accounts, which will highlight any irregularities, such as people applying for loans or cards in your name. This is often the first way that you will know your details have been leaked.
2.Credit cards/ store cards &borrowing:
- Store/ credit cards: These are a good way to spread your payments but make sure you can afford to pay off what you put on them. Only making the minimum payment will cost you far more in the long run, and lenders will question your ability to afford your borrowing, which can harm your credit rating. But whatever you do, never miss a payment – they stay on your credit report for six years and will deter lenders in future. If you can’t make the minimum payment, speak to your lender and pay what you can.
- When to apply: Check your credit rating before you apply for a new store card or credit card. This will give you the best chance of knowing if you will be accepted or not. A service like Credit Expert will tell you what factors are affecting your rating, positively and negatively, and can help you improve it. If you check early you may have time to improve things before Christmas, or ahead of the sales for the sales.
- Avoid a rejection spiral: If you apply and are declined, don’t apply for another – find out why you weren’t successful. Although being turned down by a lender won’t affect your score, too many applications in a short space of time will. Lenders can view this as a sign that you are struggling with your finances and are therefore a high risk. Likewise, try not to apply for too many cards in a short space of time – to see if you could get one – even if you have no intention of using them.
- Check your unused balance: It’s not just how much money you have on your cards that affects your rating – a high unused credit limit can, too. If lenders think you have access to more credit than you can afford if you maxed out all your cards, they may view this as a risk and be reluctant to lend you more. If you have unused cards, or some with very low outstanding balances, consider paying them off and then closing them down.
*Insight from Experian Hitwise