Credit Card Security: Choosing, Using and (gasp) Losing

August 3, 2016

Maybe you received a phone call from your credit card company, or your card was unexpectedly declined, or you looked in your wallet and found a blank space where your credit card used to be. Unfortunately, many of us have experienced credit card fraud.

Your credit card, or card number has been stolen. The first next step is to notify your financial institution and dispute the transaction(s). Each financial institution has a procedure in place to provide provisional credit while the dispute is being processed. Sounds short and sweet, doesn’t it? Not always. To get to the happy ending of this story, we need to start at the beginning.

Chapter 1: Choosing a Card

We ask a lot of questions when applying for a credit card or opening a new checking account. What is the rate? How much are the fees? Does the card come with any perks? The question we sometimes forget to ask is: what happens if I experience fraud?

Federal law limits consumer liability to $50 on signature-based transactions. Regulation E set forth by the Federal Reserve applies to PIN-based transactions and restricts consumer liability to $50 as long as the financial institution is notified in a timely manner, within 60 days after the error appeared on your statement. However, if it’s not reported within this time limit, your liability could jump to $500 or even become unlimited. Before opening a new card or account, ask if the financial institution offers a $0 liability policy and make sure you understand the rules. Knowing this, you may want to shop around to see which card will offer you the most protection in the event of a fraudulent transaction. For example, Westerra Credit Union has a Zero Liability policy that protects our members from unauthorized purchases.

Another good question to ask is: does the financial institution offer free security alerts or other card security options? For example, Westerra Credit Union has an app called CardNav that helps you manage your card usage. Once installed, you can use it to set alerts, instantly turn your card on and off, limit purchases and even automatically decline transactions by location, i.e., local, regional or international.

Chapter 2: Using a Card

Take a photo of the front and back of your new card and store it in a secure location. If your card is lost or stolen, you will have easy access to your card number and the correct phone numbers to call to report your card lost or stolen.

Check ATM’s and gas pumps for “skimmers” before inserting your card. If something looks suspicious or you are in doubt, do not use the machine.

For security purposes, never share your Personal Identification Number (PIN) with anyone else, don’t keep your PIN with your card and don’t choose an obvious PIN like 1234.

Another idea is to have a credit card that you use specifically for transactions that may be less secure. I use one of these cards and keep it completely separate from my regular checking and savings accounts. I use it at Farmer’s Markets and festivals or other places where I may not be familiar with the merchant.

Review your checking or credit card statement every month and review your transactions often. The sooner you notice a suspicious transaction, the easier it is to resolve.

Chapter 3: Losing a Card

Call your credit card company or financial institution as soon as you realize that your card or card number has been stolen. They will cancel the card and review your recent transactions. They will also explain how your replacement card will be provided.

If there are fraudulent transactions, ask about the dispute process and related time frames. Some institutions require that you sign specific forms while others simply request a written notification. If forms will be mailed to you, make sure that you understand how soon they need to be returned to ensure that you are reimbursed. Ask about the time frame for reimbursements as well.

File a police report. While it’s unlikely that the police will catch a random credit card thief, filing a police report will help in the case of fraud rings and give the investigation a bigger pool of data to work with. My credit card was compromised while I was on vacation. My card number was stolen and sold to someone in New York. I filed a police report, and 14 months later the police called me back. My police report helped them discover a fraud ring and arrests were made!

For more tips go to www.westerracu.com/security-center.

This post was written by Chris Hardenberger (NMLS #515568) from Westerra Credit Union. If you’d like to write a guest post for The Dime Colorado, email us at dimecontact@copera.org.