Credit cards are a fast, convenient and flexible way to pay for countless types of purchases and expenses. Compared to carrying cash or using bank funds via debit cards, credit cards can be a very secure form of payment, but they’re not without their own risks.
Credit card fraud in the U.S. totals more than $5 billion a year. While many card issuers don’t hold users liable for fraud that’s reported within 30 days, and U.S. law limits card-present fraud to $50, being a victim of credit card fraud can still be a headache in the best cases.
Ultimately, it’s each cardholder’s responsibility to protect their credit card information, watch for fraudulent activity and report any fraud in a timely manner. The tips below will help you protect yourself from credit card fraud and minimize any impact or expense should fraud occur.
Understand how card fraud happens
It’s hard to protect yourself from credit card fraud if you don’t know how it occurs. Here are the major ways that card fraud happens:
- Physical theft: The physical card itself is stolen (example: pickpocketing).
- Copying: A credit card’s information is written down, photographed or digitally copied (example: a credit card skimmer installed on a gas station pump).
- Data breaches: Credit card information is stolen from a computer system or device where it is stored (example: a cyber-attack on a home computer or a retailer’s payment system).
- Account hijacking: An unauthorized user gains access to an account where credit card information is stored and uses the account to make charges (example: a fraudster gains access to a victim’s online shopping account and makes purchases without their knowledge).
- Identity theft: A victim’s identity is stolen and used to open a credit card in their name (example: stealing someone’s name, social security number and birthdate and opening a credit card using their identity).
- Overcharging: The amount of a legitimate transaction is increased without the victim’s knowledge or permission (example: a restaurant worker charges a higher tip than the customer authorized).
Your first line of credit card defense is therefore to guard yourself against these activities as explained in many of the tips below.
Keep your cards safe
The safest place to keep a credit card is on yourself. Keeping purses close to your body and wallets in a front pocket helps guard against snatch thefts and pickpocketing. Avoid carrying more cards than you need for your daily purposes. Don’t leave your cards, especially the sides with the numbers, in public view where someone could photograph them.
Securely dispose of sensitive information
Be careful when throwing away paperwork that may contain sensitive information. Billing statements or other materials with your credit card information can be plucked from the trash by dumpster-diving fraudsters. Make sure to shred sensitive materials and cut up old expired or canceled cards.
Beware of card skimmers on public card terminals
ATMs, gas station pumps and other minimally supervised card terminals are popular targets for credit card skimmers. These devices can be fitted over the card slots to copy credit cards as they are inserted. If you must use one of these terminals, check for loose or bulky card slots, broken security seals, unusually thick keypads or other signs of tampering before using your card.
Take care when signing credit card receipts
Before signing any credit card receipt, take the time to fill out each line and verify that all the amounts are correct. Instead of leaving blank lines, draw a line through them or write “$0.00” to make it harder for someone to write in a higher charge without your knowledge.
Protect yourself from scams
Many scammers have become skilled at posing as credit card companies, banks, the IRS or other institutions. Be on your guard. No legitimate company or organization should contact you asking for your credit card number, passwords or other sensitive information. Don’t give out these details in response to any call, email, text message or other form of contact you receive. If you want to be certain you’re really speaking with your credit card company, call the number on the back of your card. For more advice on protecting yourself from these types of scams, known as phishing, click here.
Practice good digital security
Your web-connected devices, your internet connections and the websites you visit all affect the safety of your credit card information online. Only enter your credit card number on websites you are certain are legitimate. To ensure you have a secure connection to a website, make sure the webpage address starts with https:// rather than just http://. Be wary when following links from emails or web ads as these may direct you to scam websites that try to steal your credit card information. Make sure your devices have the latest updates, including for the operating system, security software and browser. Avoid using public Wi-Fi connections if possible, otherwise, stick to trusted password-secured networks.
Keep your passwords safe
Strong and safe passwords are an important part of protecting your credit card number in the digital realm. Many people have their credit card information saved in their online shopping accounts, in their web browsers or in other locations on their computer or online. Make sure any account or device that contains sensitive information is protected by a strong password. A mix of uppercase and lowercase letters, numbers and symbols make for more secure passwords. Try to use different passwords for each account, so a fraudster can’t access multiple accounts if they manage to crack one of your passwords. Avoid writing down or sharing your passwords, and consider using a secure password manager.
Watch for fraudulent activity and report it immediately
Although credit card companies have ways of blocking or alerting you to potentially fraudulent activity, it’s ultimately up to you to catch and report fraud on your cards. Review your credit card statements each month, and if you spot any charge you don’t recognize, no matter how small, report it to your card issuer right away. The sooner you report the fraud, the less likely you’ll be on the hook for the charges, and the sooner you can get the situation resolved. Many card issuers also allow you to check your most recent transactions on their website or mobile app, and they may also provide the option for you to be notified about certain types of activity on your cards, such as purchases over a specific dollar amount.
Check your credit reports regularly
It’s easy to review your own credit card accounts for fraudulent spending, but how would you know if someone had opened a card under your name without your knowledge? The most important way is by regularly checking your credit reports. Available for free at least once a year under U.S. law, your credit report will show all the credit accounts tied to your identity. Check your reports for anything out of place, and take any necessary steps to report and correct unauthorized accounts or activity. If you think your identity has been compromised, you may need to take additional precautions, such as freezing your credit to prevent new accounts from being opened in your name.
While all these safeguards may feel like a bit of a hassle, once you start putting them into practice, they should become second nature. Not only will these practices help protect you against credit card fraud, they’ll also keep you safer from other crimes like cyber-attacks and identity theft. By following these tips, you can maintain more peace of mind when using your cards.