Did you know that avoiding debt is not the only problem that you need to worry about when using credit cards? Another threat that you need to consider is identity theft.
Thanks to the digital age, all our information is accessible online. Hackers are able to steal our information and use it to steal from us. Once they have our information, they can use it to apply for credit and acquire stuff using it. We end up paying for all the credit purchases made by these thieves because we cannot prove that these were unauthorized transactions.
According to the press release published on FTC.gov, identity theft is the leading complaint that they got from consumers in 2014. It is 13% of the overall complaint that they got. The question is, how does identity theft happen? How exactly can thieves get our information?
One way is for hackers to copy your details through the magnetic strip of your credit card. If you notice, the current credit cards that you own have a magnetic strip on it. This contains vital information about you and allows you to purchase on credit. When thieves get this information, they can buy on credit using your data. That means all their purchases will be credited to your account and you will be left to pay for all of them.
For the past few years, the government had been looking for ways to counter these identity thieves. One of their resolutions is to protect the information taken from credit cards. There is a widespread action among financial institutions and credit card companies to replace the magnetic strip credit card and distribute cards with computer chips in them.
Features of the new credit card
An article published on USAToday.com explained a lot of things about these new credit cards. Apparently, banks in the US are already tired of paying consumers whenever it is proven that they have become victims of identity fraud. After all, it is their loss when consumers do not pay for their debts when it is proven that the transaction was unauthorized.
The solution to the problem, or at least they believe will help lower the cases of identity theft, is to change all magnetic strip cards into those with computer chips. According to the article, the magnetic strip cards are outdated anyway. A lot of countries are already using this computer chip cards and it has proven to be more effective in keeping the data of the consumers safe whenever they use their credit cards.
Here are important facts about the computer chip credit cards as taken from the USA Today article.
- The switch to the new credit card started last year and will continue to happen within the year. This switch will not just include credit cards but also debit cards. This is a massive switch because a lot of merchants all over the country will have to switch their equipment to be able to read these new cards.
- The computer chip equipped credit card has a metal chip embedded in front – this placement is necessary to make the information stored in it safer. The new cards also have a magnetic strip in case a merchant does not have the new equipment that will enable them to read the chip.
- A deadline has been set on October 1, 2015 for merchants to update their equipment to allow reading of computer chips. After that, there will be a liability shift that will happen wherein the merchants will be responsible in case the consumer becomes a victim of identity theft because of the magnetic strip cards.
- The computer chip assigns a code that is unique to every transaction that you will make. This code, even if stolen cannot be reused – which makes it pretty much useless to thieves intercepting your data during transactions.
- Computer chips can be duplicated but it is harder to do – at least if compared to magnetic strips. The chip is actually used to prevent the duplication of credit cards.
- When making a purchase, the new credit card will be inserted into a machine – similar to those found on ATMs. This is how the information is read.
- At the moment, the chip will be accompanied by a signature from the consumer for added security. In the future, it is expected that the chip will accompanied by a PIN instead. It is believed that signatures are not really checked anyway so PINs should be more authentic.
Once you have this new credit card, you may able to have less fear in making purchases with it. This new card can help you enjoy a better future – at least, this is true if you can avoid too much credit card debt.
Tips to protect your credit card from identity theft
Obviously, credit cards are a staple in our wallets. The convenience that it brings cannot be replaced by cash. However, you need to make sure that you can further protect it from identity theft.
According to an article published on Time.com, almost 1 billion records were leaked in 2014. This is not primarily caused by credit cards. Some of the data were taken from the records of merchants, retail companies, and even the government archives. You are in danger of identity theft from all of these portals. While being pessimistic will not solve your problems, you are encouraged to be very vigilant when it comes to your personal data. Be very careful whenever you divulge your information – especially when it is being done online.
Fortunately, there are several things that you can do in order to keep your data from being taken by malicious individuals. Here are some tips that you may want to follow in order to protect yourself.
- Do not just give your credit card to anyone. When you are in a store or restaurant, be conscious of the people asking for your credit card. As much as possible, keep your eyes on your card even as it is brought to the cashier. Not only that, you need to ensure that the person asking for your card is an employee of the establishment.
- Be careful of the data you post online. The rise of identity theft incidents happened because of the growth of the digital age. People post just about anything online. Be very careful when you do this. Some thieves can use seemingly innocent posts against you. Do not make it easy for them to figure out your regular schedule. Once they know your activities, it will be very easy for them to steal from you. Do not give them that window of opportunity. Make your profiles and posts private and be wary of friend invites from people you do not know.
- Monitor your credit report. One of the effective ways to be vigilant when it comes to identity theft is to keep a close eye on your credit report. You need to check it every now and then to see if there are entries there about transactions that you did not authorize. When you find these unauthorized transactions, you need to dispute them immediately so they can be investigated and removed if proven to be a result of identity theft.
What you need to know about identity theft is that you can prevent it if you practice vigilance and credit management. When you are careful about your own information and transactions, you can protect yourself from becoming a victim of any form of theft.
Although the new credit cards will help protect you from identity theft, it will not protect you from debt. This is a different problem that you need to deal with. To help you avoid credit card debt, here is a video that shows the common causes of this type of debt.