More credit.

In the worst economy we've seen in decades, you would think people would take some initiative to fix their situations. Cut back costs, pay off what they can, protect yourself as much as you can. Instead, all I hear about is people jumping off the proverbial deep ends left and right. Here I am (not hardly in the rough spot that others are), cutting back my cable bill, turning down my netflix (not off, but less), adjusting my cell phone bill, rethinking my expenditures left and right ... while I see people buying cars, throwing money around, traveling (and not cheap!), etc -- despite the layoffs in EVERY single industry.

Ok, enough about the economy and downers in general - here is the positive: more knowledge to protect yourself!

1. Companies are waiting for you to screw up. Even if you are a loyal, dutiful paying customer for an extended period of time - fall behind on ONE (yes - ONE) bill and you will be charged accordingly. Rates can be changed from low to the red zone (up to 35%) instantly.

My brother opened an old navy card to save 10% off on an item. He never recieved the first bill. From that point on, the charges went from unpaid to two years of phone calls, letter-writing, harassment, credit problems -- them attempting to go after my father (who shares the same name) -- and finally a closed, and disputed fee. Guess how much the item was? Approximately $50. After the initial unpaid bill, he was put into something called "universal default" for basically being a deadbeat. This causes high interest rates, bad credit, and lots of collection calls. OVER $50! The best way to avoid the problem is the most obvious: Pay your bills on time. Bankrate.com, a personal-finance Web site, further advises that if you have a disputed bill, resolve it before it reaches collection status. (Easier said than done in this case - since the first (and I'm sure follow up notices) never reached my brother).

2. Credit card companies are part of the identity theft problem.
Forged credit card applications, ready-made checks billed to credit cards, and bank data all contribute to the rising identity theft problems. Shredders can help avoid people following up on the credit applications sent to your house. You can also minimize the amount of applications sent to your house by registering at optoutprescreen.com.

Aside from that - monitor your accounts. Protect your passwords and your computer. If you see anything suspicious - call your credit card or bank. If you're even the least bit worried, cancel your card and ask for a new one. No harm, no foul.


3. Teach your kids about credit.

I couldn't tell you how many of my friends messed themselves up early on in college and are still not sure how to dig themselves out - financially, or with their credit.

4. Never ever use a debit card. Ever.

I worked at QVC in the fraud department for approximately 2 years. In those two years (4 days a week, 10 hours a day), I probably spent 80% of my time advising people to close their debit cards and never EVER use it again.

Debit cards resemble credit cards in all visible ways but have fewer protections for the consumer. Some debit cards offer purchase protection -- meaning you can replace a damaged item within 90 days -- but many do not.

And although unauthorized transactions are supposed to be refunded by the issuer, banks are less motivated to speedily resolve cases involving debit cards than credit cards. Why? Debit cards draw on a checking account, meaning they're essentially checks in plastic form. Credit cards, by contrast, constitute a loan -- meaning it's the bank's money, giving it more reason to protect it.

Also - another thing people can't control: if your card is stolen and your money is drained -- that is your money gone. If it draws the money on the same day as your mortgage draws from your account (or some other automatically deducted amount that could bounce) -- you could end up with late charges, bounced check fees, or worse - unable to pay your mortgage if money is tight.

5. Last, but certainly not least: Our whims are legally binding.
You may think you've signed up for a credit card with terrific incentives, a low interest rate and just the right mix of perks and fees to suit you. But don't get too comfortable. Your card issuer can alter the terms of your once-perfect agreement at any time, as long as it provides you with advance written notice -- of as little as 15 days.

Although most cardholders would say this is their biggest pet peeve (next to non-English speaking representatives), a credit purchase is an unsecured loan. It's the riskiest sort of lending available and that's why it's expensive. The banks have to protect themselves. As such, credit card lending is a highly competitive marketplace, unhappy customers are almost always able to seek alternatives, the spokeswoman adds. The best defense against this is simply - vigilance. Watch your mail from your credit card, even if it looks insignificant.