Credit and debit cards are one of the easiest things to take. They are handed over to waiters and waitresses everywhere.  Those cards leave your hands and are processed without you seeing them run through the machine.  It just takes a second to take a picture of the front and back of your card with a smartphone.  A few days later, you notice your card was used to make online purchases.  Those items were shipped to another address.  That address is not the address of the person who used your card but a location they monitor.  They know who is home and when.  They wait around for the package to be dropped off and casually pick it up.  If the homeowner brings the package in their home, they knock on the door and a request the package.  It will seem harmless enough.  People make mistakes all of the time.  Your credit/debit card can have a chip in and be backed by the latest technology.  All of that is bypassed once the card is entered on a website.  Those transactions are marked are mark as “card not present”.  This allows people to buy online.  If your card number turns into a duplicate card, it does trigger an alarm to your credit card company which leads to them calling you and placing your card on hold or cancelling it.  There is also the possibility of you losing your wallet or leaving your purse unattended long enough for someone to pick up a card or two. 

Most companies you deal with on a regular basis will store your credit or debit card in their system.  This provides them the opportunity to bill you for their service on a monthly basis.  This could be your gym, movie, cable, cell phone, and so many other recurring bills that you have signed up for.  If they get hacked, your information is sold on the black market.  The goal of those that buy the credit/debit card numbers is to use them before the cards are canceled.  In each case, you run the risk of having money leave your account or increase your debt added to your card which can cause your credit score to be impacted.


What you should do

Never carry multiple credit or debit cards with you.  This should be a given but there are those of you who carry your entire life in your wallet or purse.  If you only carry 1-2 cards, you will probably spend less and you have a greater chance avoiding damages to your bank account and credit reputation.  In the introduction, we spoke about my home intruder.  We talked about preventing and limiting damages.  If you carry all or most of your credit/debit cards with you, and they are stolen, you will have to deal with greater damages compared to carrying only one or two.  If you lose those 2, you have others cards you can use until you get refunded by the fraud department of the cards that were compromised.  It also makes it easier to remember the name of the 2 cards you carry with you.  If you carry a debit card, do not link it to the checking account you use to pay your bills with.  Most of us have one checking account and we have our debit card linked to it.  This is a problem if your card is lost or stolen.  Not only did they steal your money, your bills are late.  Setup a separate checking account and link it as the primary to your debit card.  Use this as your spending account.  It is important to make sure your account does not have overdraft protection and make sure the bank will not allow you to overdraft.  This is a very important step to remember.  No one can take money from your debit card that you do not have.  Keep as little money as possible in this account at all times.

Let me give you an example of how I use this process.  I know that I will go out to eat with my family and it will run about $60.00.  I will need to fill my gas tank which is $50.00 and my gym membership of $30.00 is due.  I will transfer $60.00+$50.00+$30.00 into the spending account for a total of $140.00.  If I lose my card or it is stolen on my way to get gas, the most amount of money that I have lost is very little.  This is much better than not being able to pay your rent/mortgage, car payment, etc. while the bank performs their fraud investigation.  Imagine if my debit card was linked to the same account where my direct deposit goes and my mortgage, electric, water, car payment is paid from.  I would not be able to pay those bills until the bank returns the funds.  Some of you avoid this by using credit cards and paying them off at the end of the month but you need to make sure you budget or you may find yourself reading a book on how to get out of debt in a few months.  If you do chose to use a credit card for one reason or another, carry one that has the lowest possible credit limit.  This will help avoid large amounts of credit card debt due to fraud (or personal spending habits). These could cause issues if you are looking to get a loan to buy a house, car, boat or any large purchase.

I am always worried about someone opening a line of creditwithout me knowing about it until I need to buy something.  There is nothing worse than thinking your credit score it in the 700s only to find it is on the low 500s because someone was able to open a line of credit under on your behalf.

To avoid this, you can place a credit freeze on your credit report. For a small fee, the major credit bureaus will place your credit on ice.  This will stop an intruder who had enough information to steal your credit.  They would not be able to use that information to buy items with your credit or get a credit line under your name/credit record. It freezes your entire credit record with the 3 main credit bureaus in the US.  Once you freeze it with one of the bureaus the others are notified of the freeze.  The sounds great but it’s a double edge sword.  You will not be able to apply for credit as well.  If you forget you have it and runout to open a credit card, apply for a mortgage, car or personal loan, you would be rejected.  You will need to call up the credit bureau you used to place the freeze and have it released before you attempt to apply for a loan or credit of any kind.  I recommend that you unfreeze it temporarily and once you are done, freeze it again.  In some cases you can have it frozen automatically.  This is much better than permanently unfreezing it. Remember its all about limiting your exposure.

If that is too extreme for you, then consider setup alerting with one of the 3 major credit bureaus in the US. Experian, Equifax, or Transunion each have tools to help you stay in the know when it comes to your credit. If anything changes to your credit you are immediately notified.  They typically charge a small monthly fee for this service but it is well worth considering.

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