In 2017 alone, hackers stole 14.2 million credit card numbers in data breaches, according to Experian. With more than 1,500 breaches and 179 million data records exposed last year, there is a possibility your information leaked.
Sometimes all you have to do is use a credit card in a restaurant, at a gas station, or while traveling abroad to join the tens of millions of Americans who have their card number stolen annually. It is important to understand how card fraud works so you know how to avoid it. But even if your credit card is stolen, solving the scary situation may be easier than you think. Follow along to learn more.
What is credit card fraud?
Credit card fraud is the unauthorized use of a credit card for financial gain. Credit card fraud happens at cash registers with a stolen or duplicated card and online where a physical card is not needed. And it is costly.
Global card fraud is a more than $20 billion industry. Stolen credit, debit, and prepaid card numbers are easy to use online, even as card-present transactions increase in security with the EMV security chip.
Banks, card processors, and other financial companies are constantly on the hunt for fraudulent transactions and use incredibly complex systems to instantly detect fraud as it happens. But while fraud detection gets better and better, so do the methods bad guys use to avoid them.
Avoiding credit card fraud
The best thing to do is avoid credit card fraud from the start. While even the savviest credit card users fall victim on occasion, there are some simple steps we can take to avoid credit card fraud before it happens.
- Go paperless – The first step to avoiding fraud is avoiding copies of your credit card number getting printed on paper. That means going paperless for your credit card statements. Your bank’s website is generally safer than a mailbox. Plus it’s better for the environment.
- Use strong passwords – Do you use a common password, easy to guess password, or the same password on every website? While these scenarios are quite common, they are terrible for your data security. Every app and website should have its own unique password. Using a password manager like LastPass or Dashlane makes it easy to do.
- Shred documents – If you do get paper statements or other mail from your credit card company, don’t throw it in the trash. And don’t throw it in the recycle bin whole. Invest in a high-quality office shredder. The one from Costco is a good choice and won’t break the bank. Also, shred old cards and any other mail or paper with your personal information. Then recycle it.
- Check for skimmers – Whenever you use a card at a gas station, ATM, or kiosk, be on the lookout for card skimmers. These are devices that allow criminals to copy card information for use later, and they fit right on top of credit card readers.
- Be safe online – Use your best judgment when using your credit card online. Don’t click on unfamiliar links in emails. Always look for “https” at the start of any website address. When shopping online, make sure it is a site and company you can trust.
- Freeze your credit – Money expert Clark Howard says this is the #1 thing you can do to protect yourself against fraud. Learn how here.
Credit card fraud detection and protection
Behind the scenes, your card issuer and other companies work around the clock for credit card fraud detection. Even if your information is stolen, there is a very good chance any fraudulent transactions would be detected and blocked before it goes through.
Nonetheless, review your statements monthly and consider checking in on your transactions even more often. When linking cards to services like Google Pay, you can get a notification on your phone each time a card is used so you’ll know if something is wrong right away.
If you do fall victim to credit card fraud, have no fear. Your credit card protects you from any serious financial harm even if your card number is lost or stolen.
Credit cards are the safest way to pay
If someone steals your debit card number, they can drain your bank account of funds before you know what happened. While your debit card does offer some protection, it can take some time to get your money back, and you may not get the entire amount back.
When your credit card number is stolen, you can call your credit card company to report the fraud, or report it online, and any fraudulent transactions are removed from your bill. Most credit cards offer a $0 fraud liability benefit so you will never lose a dollar.
Just remember to pay your card off in full every month and avoid paying expensive credit card interest. If you do, credit cards are still the safest way to pay.
More Clark.com Credit Card stories you might enjoy:
- Clark Howard: Here’s my philosophy on credit cards
- How to improve your credit score by 100 points in 30 days
- How to lower your credit card interest rate