According to the Federal Trade Commission, credit card fraud has become a crime epidemic in this country, accounting for 25% or more of all cases of identity theft. Confidential credit card data used to only be vulnerable to traditional pickpocket kinds of theft, but today there are numerous ways to hack into your account. There are, however, lots of different ways to defend yourself including many available security features that most cardholders do not even realize they have at their disposal.
The security features listed below are all free of charge and quite effective in terms of helping to reinforce your financial protection.
While it is true that most credit card regulations require merchants to verify the signature on the back of a credit card, you have probably noticed that this procedure is rarely followed. Even if they do check the signature, it may be pretty easy for a criminal to fake it – especially if they use an electronic terminal where you can basically just scribble anything and it click “done.”
Many credit card companies offer the option of putting your own photograph on your plastic, which can be a great way to significantly enhance your card security. Most merchants will notice if the photo on the card looks nothing like the person presenting it, and the average criminal will not want to risk being caught while using a photo I.D. credit card.
A number of card companies, including American Express, Discover, MasterCard, and Visa, offer free purchase monitoring services. The way this works is that the card issuer keeps track of your purchase habits. They begin to develop a profile or pattern based on where you shop and what kinds of items you usually buy. If a transaction comes across your account that does not fit that normal pattern, that will raise a red flag so that the card company can notify you by phone, email, or text to confirm that it is a legitimate charge.
Temporary Purchase Numbers
Especially when shopping online or by phone, it can be hard to infallibly identify yourself. For that reason most criminals who steal credit card information prefer to use that data online or over the phone. An innovative way to help ensure your safety when online or making payments by phone, is to ask your credit card company to provide a one-time-only temporary credit card number.
Several card companies including Citi and Bank of America offer this feature. To initiate the service, go online and set it up or call your bank’s customer service line and ask them how to do it. The best way to use these alternative numbers – which are connected to your actual account and credit card– is to take advantage of them only once so that each number has the shortest possible shelf life.
The idea behind this kind of strategy is that since the numbers are so temporary, thieves who may intercept your card number during a wireless or virtual transaction will find it useless. As soon as you use it for the one-time-only purchase it expires and cannot be used again.
Zero Liability Policies
Every major credit card company also provides zero liability coverage, or zero fraud liability. This feature is great for those who fall victim to credit card fraud because they aren’t liable for unauthorized transactions. There are some exceptions to this coverage you should be aware of though, because some banks limit zero liability protection to no more than two transactions per year, or, coverage may not extend to ATM transactions involving a PIN code. Be sure to check the terms of your credit card agreement for details.
Don’t have zero fraud liability protection? That’s ok; even without it you can enjoy peace of mind knowing that if your credit card is used in an unauthorized way (and you report it promptly), your liability cannot exceed $50 thanks to the Fair Credit Billing Act.
ATM bank cards have less stringent protection, which is why many experts recommend using your credit card for point-of-sale transactions, not your debit card. Another compelling reason to do this is because if a crook uses your ATM card they will have access to your entire bank account versus just gaining access to the limited credit available through a credit card account.
Credit Card Balance Alerts
One of the most overlooked security features offered by virtually every credit card company is the ability to set personal preferences through your online account. The reason that consumers often fail to take advantage of this safeguard is because it is not usually promoted or viewed as a security feature. Instead, it is one of the many convenience perks or budgeting tools that most card companies offer.
You can set up your account to notify you by text or email, for example, such as notifications that your monthly payment is due or that you are reaching your credit limit. The way to make it work for you in terms of card security is to set the alerts to notify you when your balance hits a certain threshold.
Let’s say, for example, that you normally use your card to make everyday purchases under $100. You can set up your account to alert you anytime a single transaction of more than $100 hits your account, because that might be an unauthorized charge.
You may also set it up so that you are alerted when your available credit shrinks to a certain dollar amount. If your typical available balance is $1,500, for instance, and you usually only use around a maximum of $500 of that per month then you could be notified whenever charges accumulate beyond $500.
Pin and Chip Technology
Perhaps the most robust credit card security feature is Pin and Chip technology, which replaces the insecure magnetic strip on the back of your card with a computer chip embedded into the plastic. The chip is virtually hacker-proof, whereas the financial data stored on a magnetic strip is quite easy to steal using inexpensive devices and basic technologies.
Pin and Chip cards are considered new and innovative in the USA, but it has been in widespread use in many other parts of the world for quite some time. Until the United States catches up with the rest of the world, you can request a pin and chip enabled card from your bank to see if that option is available yet. The downside for the time being, though, is that many merchants are not equipped to accept these types of cards.