Credit card security: Keeping your information safe

Credit cards

Credit cards are a convenient payment method, but they also present security risks. Credit card fraud is the leading form of identity theft in the United States.

To keep your financial information secure, many credit card companies have developed advanced safety features. By choosing a credit card that offers these features, you can protect your finances and enjoy peace of mind.

We’ve put together this guide to help you choose a secure credit card.

Here’s what we’re going to cover:

  • Credit card security risks
  • Credit card security features
  • Using credit cards safely
  • Oportun: Affordable lending designed with you in mind
Key takeaways:

  • Credit cards are a convenient payment method, but they’re also vulnerable to fraud. To protect your finances, it’s important to choose a credit card with up-to-date safety features.
  • You can avoid some security risks by being careful and cautious. For others, you’ll need to rely on the technology used by your credit card.
  • Credit card companies are constantly developing new ways to protect their customers. As technology evolves and more threats are identified, more security features are put in place to prevent credit card fraud.
  • If you believe your financial information has been stolen, it’s important to contact your bank or credit card company at once.

Credit card security risks

Here are the most common security risks associated with using credit cards. You can avoid some of these risks by being careful and cautious. For others, you need to rely on your credit card’s security features for protection.

If you believe your financial information has been stolen, be sure to contact your bank or credit card company at once.

Data breaches

Now that so much of our shopping is done online, people often use credit cards to make purchases over the internet. When you submit your credit card information to an online vendor, it’s important to check that the transaction is secure. Look for “https” in the site’s URL or a padlock icon in the address bar to indicate a secure connection.

On unsecured websites, your credit card information could be exposed to hackers. Using a secure online payment system like PayPal is a good way to avoid this risk.

Skimming

Anytime you swipe your credit card through a machine, you could be putting your personal information at risk. Hackers can tamper with credit card readers and install undetectable skimming devices. These devices capture your financial information, which the hackers can then try to use.

Phone scams

Phone scams have been around for decades and are still a danger today. Phone scammers may call you and claim that they’re from the IRS or your bank. They may offer you a free vacation or some other gift. After that, they will ask for your credit card information or other personal data.

It’s helpful to know that government agencies like the IRS will send you notices in the mail before they call you. In general, it’s smart not to give out information to anyone who calls you on the phone unless you know them personally.

Phishing

Fraudulent messages sent by email, text, or social media are called phishing. The scammers behind phishing disguise themselves to look official. The messages may look like they’re from a reputable company, a close friend, or even your boss. You should never click on links in messages that look suspicious. Always verify the sender’s contact information before clicking any links or replying to messages.

Credit card security features

Fortunately, credit card companies are constantly developing new ways to protect their customers. As technology evolves and more threats are identified, more security features are put in place to prevent credit card fraud. 

Here are some of the major security features available on credit cards today. Look for these protections when you’re choosing a credit card.

EMV chips

Traditional credit cards have a magnetic strip that you swipe through a reader. Today, many cards also come with an embedded EMV chip. Rather than swiping the card, you insert it into the reader and wait for a message telling you to remove it.

Cards with EMV chips are much safer, because the data stored in them changes with each transaction. Even if a hacker captured your financial information, they would not be able to use it.

Digital wallet compatibility

Most credit cards can be added to a digital wallet, such as Apple Pay or Google Pay. Paying with your digital wallet instead of your physical credit card offers several safeguards, like:

Fingerprint and facial recognition. To access your digital wallet, you usually have to either enter a security code or use your fingerprint or face. Your fingerprint and face offer the highest level of security because no one can duplicate them. Even if you lose your phone, it’s unlikely that someone else could get into your digital wallet.

Near field communication (NFC). When you pay with a digital wallet, you hold your phone over the payment reader for a few seconds. NFC technology protects you from credit card skimming because you don’t have to swipe your card through a device that may have been tampered with.

Tokenization. Tokenization is a way of encoding your financial data while it’s being shared with a vendor. It ensures that no one else can read your credit card information, even if they are able to intercept it.

Contactless payment

If you don’t want to use a digital wallet, you can enjoy many of the same benefits with a contactless credit card.

Contactless credit cards also use NFC technology to protect against credit card skimming. And you have the convenience of simply tapping your credit card on the reader to make a payment.

Advanced fraud monitoring

Even with these protections, fraud is still possible. Many credit card companies now have advanced computer systems that monitor and track your spending patterns over time. If they notice a purchase that’s unusual for you, they may send you a fraud alert.

Some of these alerts are false alarms. You may have made a larger purchase than usual, or paid for an expensive trip. But anytime you get a fraud alert, be sure to check that all transactions on your account are valid. If you see any suspicious activity, you’ll be able to report it right away.

Account freezing

Many credit card companies allow you to freeze your account temporarily to prevent any transactions from taking place. This is useful if you misplaced your credit card or believe it was stolen. Freezing gives you some time to look for the card before you decide whether to cancel your account. If there is any fraudulent activity on your account, you will want to cancel the card right away.

You can freeze your card by logging into your account online, or by calling your credit card company directly. Their phone number should be printed on the back of the card.

Zero-liability protection

Under the terms of the Fair Credit Billing Act, the most you can be charged for any fraudulent purchase on a credit card is $50. That’s the limit if you report the fraud to your credit card company within two days of discovering it.

If your card has zero-liability protection, you won’t even have to pay that. Your credit card company should reimburse you the entire amount of a fraudulent purchase made on your card as long as you report it within 60 days of the transaction.

It’s a smart idea to review your credit card transactions regularly. This lets you catch any unauthorized activity and report it right away.

Using credit cards safely

Credit cards with these advanced security features help protect your financial information.

But remember that hackers are always looking for new ways to scam credit card customers. You can help keep your credit card information safe by keeping these general guidelines in mind:

  • Don’t give out sensitive information over the phone
  • Keep track of what you spend using credit cards
  • Check your bank statements to make sure all transactions are valid
  • Avoid making payments on public WiFi or shared computers
  • Keep your PINs and passwords private

By taking reasonable care and choosing a credit card with up-to-date security features, you can keep your financial information safe and enjoy greater peace of mind.

Oportun: Affordable lending options designed with you in mind

Now that you understand how to safely use credit cards, you can learn about how Oportun may be able to help you if you’re looking for affordable credit options.  Visit our homepage to learn about:

  • Personal loans
  • Credit cards
  • Secured personal loans
  • And more!

 

Sources:

Experian. Identity theft statistics

Experian. How to protect your identity while shopping online

Investopedia. EMV.

IRS. How to know it’s really the IRS calling or knocking on your door

FFIEC. Contactless payment cards, proximity payments and other devices

Investopedia. Fair credit billing act (FCBA)

Federal Trade Commission. Lost or stolen credit, ATM, and debit cards

NerdWallet. Credit card tokenization: What it is, how it works.

 

The information in this site, including any third-party content and opinions, is for educational purposes only and should not be relied upon as legal, tax, or financial advice or to indicate the availability or suitability of any Oportun product or service to your unique circumstances. Contact your independent financial advisor for advice on your personal situation.

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