Things You Should Know About Credit Card Theft

Using a credit card responsibly, by not charging more than you can afford to pay back and by paying your balance in full each month, helps you build excellent credit. But, if someone else gets a hold of your account information, your credit score can take a hit.

Credit card theft accounted for 17 percent of all fraud cases in 2014, according to the National Criminal Justice Reference Service. Although it might be fairly common, there are a number of ways you can protect yourself from credit card fraud. Here’s what you need to know.

How Thieves Get Your Credit Card Information

Credit card and identity thieves use a number of tricks to get a person’s personal information. In the case of major data breaches, such as the one that occurred at Target in 2013, hackers were able to break into the store’s point-of-sale system and copy the credit card information of millions of consumers.

Some cases of theft are considerably more low-tech. For example, a thief can get a hold of your information by digging through your recycling bin or trash and picking out any credit card offers or discarded bills. Some thieves pretend to be your bank or credit card company and will call or email you to ask for your personal details.

Know the Signs of Credit Card Theft

Paying attention to your credit card statements and to your credit report helps you detect signs of theft sooner, rather than later. Review your statements with a fine tooth comb each month, to make sure there are no unauthorized or suspicious charges.

You can get your credit report, for free, once a year, from each of the three credit reporting companies. Visit annualcreditreport.com to take a look at your report. Look out for any credit accounts you didn’t open and report those accounts to the company. In some cases, it could be that the credit reporting company messed up and put the wrong information on your report. It could also be that a thief opened an account in your name. Taking action as soon as you notice the issue will help clear your history and keep your credit score from falling.

What to Do If You Are a Victim

If someone steals your credit card, there are several steps you should take to get your financial life back on track. First, reach out to the credit card company and ask it to cancel the card. The company will also review recent charges with you and determine which ones are fraudulent. Legally, you don’t have to pay for more than $50 in unauthorized charges, but many credit card companies offer $0 fraud liability.

Your card company isn’t the only institution you should notify about the theft. Contact the three credit reporting companies, so that they can put an alert on your file. With an alert in place, it’s more difficult for thieves to open fake accounts in your name. Also file a report with your local police and with the Federal Trade Commission, so that there is an official record that the fraud occurred.

How to Protect Yourself

Once you’ve reported the theft, it helps to go to any websites where you have your card information stored and delete it. Storing your details on websites you shop at frequently makes it easy for you to purchase things, but it also makes it easier for a thief to get your information and go on a shopping spree in your name.

In the US, many credit card companies have switched over to cards with EMV chips in them, which make the cards more secure. When you use a chip card, it creates a special transaction ID for each purchase, so that a hacker can’t steal your card information from a point of sale register. If you have cards with chips, use them whenever you can, instead of any older swipe cards.

It also pays to be particularly diligent about your personal information. Shred or otherwise destroy paper mail and be careful about who you give information to. If you didn’t make the phone call, don’t give out your credit card information over the phone, and never reveal it in an email.

When it comes to credit card theft, an ounce of prevention is worth a pound of cure. Keep a close eye on your cards and be extra careful about who you give your personal information to.*

*This article provides broad and general guidelines and does not constitute professional financial or legal advice. You should not use this article as a substitute for your own judgment, and you should consult professional advisers before making any tax, legal, financial planning or investment decisions.