How to protect your credit card from thieves

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As someone who has had to replace her credit card twice in the last six months, I know what a pain it is when your plastic gets compromised. The first time, my card numbers were stolen, probably through a swiping system that wasn't secure, and they were used for a number of purchases across the country. My bank noticed the problem before I did and shut down the card quickly.

The second time, I unknowingly dropped the card after using it to buy gas. Some kind person who found it took the time to call my credit card company and report the card lost. That person restored my faith in humanity after it was shaken from the earlier theft incident.

In both situations, my credit card company issued me a new card, which left me cardless for about a week. (I opted not to pay extra to have the new card expedited.) Not only did that mean I had to carry extra cash around for lunch and other incidentals, but I also had to contact all of the companies that automatically charge my card each month. I missed a few shipments of household supplies from Amazon and was late on my phone bill because of that. I also really missed the convenience of being able to swipe my card to buy everything from coffee to toothpaste.

As inconvenient as losing a credit card was, the good news is that card providers offer full protection against theft. All of the erroneous charges made by the person who stole my card number were restored to my card; I wasn't on the hook for any of it. The same would probably have been true if I had used a debit card, but restoring those lost funds can take longer and be more complicated – and frustrating – since a thief can empty the cash in your bank account.

Given my recent experience, I was interested in hear from Shaun Murphy, founder of Private Giant, a company that seeks to protect personal information online. He says certain locations are so risky for credit card or debit card use that they should be avoided altogether. Those hot spots include websites that are not secure, which means they lack the "lock" icon in the browser. Hidden ATM or checkout terminals, such as a tucked-away one at a gas station, or an automated checkout terminal at a store, pose another risk, because thieves can install "skimming" devices on them and steal your information as you swipe your card.

Another risk comes in the form of apps that request your credit card information outside of the app store. Murphy says such a request should raise red flags, since you don't know who is accessing that data. He also recommends people avoid free trials that require credit cards to sign up, since those charges could be difficult to cancel later.

While avoiding these risky spots altogether is one option, another is to use a prepaid or reloadable card that does not give access to your bank account. That way, even if a thief steals the card info, he cannot gain access to any money beyond what is loaded on the card already.

Traveling also leaves people vulnerable to more risks, since we are likely to be shopping at unfamiliar locations and might have less access to our online accounts, making it harder to monitor our statements.

A survey of 1,011 adults commissioned by PayPal found that 51 percent of respondents cited security of credit and debit cards as a big concern, and 44 percent worried about the security of their financial information. Still, travelers planned to use credit or debit cards to pay for purchases on the road: Most said they considered it the most secure option, and more secure than cash or travelers checks.

There are also some new tools that make it easier to track your purchases and notice potential fraud early. One, BillGuard, is an app that examines your transactions across your different accounts and flags ones that look suspicious, including duplicate chargers or problems reported by other users. This type of crowd-sourcing can help you stay one step ahead of thieves. BillGuard also alerts you to data breaches that might affect you based on your shopping habits.

If you do notice a problem or lose your card, the first thing you should do is report it stolen to your card provider. Financial institutions have well-thought-out systems for dealing with fraud and can immediately shut down the card and initiate an investigation. In fact, most of the time, card providers discover the problem before you do, as happened in my case, thanks to complex tracking systems.

Soon, you'll have your new card and get back to business as usual – with a few lessons in mind on how to avoid the problem next time. I've changed much of my own behavior as a result of my recent card losses, including using cash more, never using my debit card to make purchases and reviewing my credit card statements more frequently to look for any unfamiliar charges. Those are small inconveniences compared to the trouble of having to replace your card.

Copyright 2015 U.S. News & World Report


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