Credit Card Fraud: All you Need to Know

Credit cards are meant to support your financial needs and to hurt them. Also, referred to as “plastic money” quite often, credit cards are a staple of financial transactions in today’s time. While the convenience and ease of use make credit cards a more popular and preferable option to make purchases, they might turn in the wrong direction if not used carefully.

Since a credit card has almost all the information (such as your name, card number, CVV, etc.) required to make a purchase, anybody who has your card can easily spend all your money, without you knowing it. Hence, it is extremely important to be careful of credit card fraud and not to lose it anywhere. 

However, if you still lose it, somehow, here is a guide to what steps you should take.

What is Credit Card Fraud?

Credit card fraud happens when a thief or a fraudster uses your stolen credit card or the details provided on the credit card to make unauthorized purchases in your name. The fraudster may also take out cash advances using your account. Credit card frauds are not rare, and may also happen to you. Credit frauds may also happen when thieves/fraudsters use your existing accounts by gaining access to your credit card information and using your details to make purchases without your knowledge or consent. Hence, you must be very careful of your credit card and keep a regular check on the transactions being made.

Here are a few ways in which a credit card fraud may happen-

  • Fraudsters or thieves may steal your credit cards and use your account numbers, usernames and passwords; thereby stealing your identity
  • Criminals may access your personal information in multiple ways such as through phishing scams conducted via phones, emails, or through social media channels, may copy your passwords or pin codes, skim your credit card data via card readers, among others and misuse this information
  • Identity theft methods also include a variety of methods wherein fraudsters hijack the existing credit or loan accounts in your name; thereby taking control of your existing accounts by changing your email addresses and passwords

What to do When you Lose a Credit Card?

Credit cards are pretty handy financial tools that can be easily carried anywhere. While this works as an added benefit, it may also work otherwise. The smaller it is as a financial tool, the higher the chances are, of you misplacing it. And if anyhow, you happen to lose your credit card, you may end up losing a huge chunk of your money. Hence, you must be careful with your credit card, as and when you get one.

However, if you still, somehow, lose your credit card, the first thing that you must do is to get it blocked immediately. Post this, you can go ahead and apply for a new one. Here are a few steps that must be taken if you lose your credit card-

  • As soon as you find your credit card missing, you must inform the issuer at the earliest. Your bank/credit card issuer will definitely have a 24*7 customer support facility to assist you in such situations. You can find the customer care contact details on your bank’s website or the official documents that you had received for your credit card
  • Along with speaking to a customer care executive telephonically, you must also drop in an email to your bank to have written proof of your concern. Don’t forget to include the details like the time and place when you lost your credit card, or how you lost it
  • Another important thing to do is to keep a track of your credit card’s billing statement. You must be sure that the thief/fraudster who found your credit card does not use it to make any purchases. If your card has an EMV chip, then he/she would not be able to make any transactions. However, if it does not have the microchip, then you must keep a check on your statement, and inform the issuer in case any amount gets deducted from your credit limit

Now, when you receive your new credit card, make sure to have all your card details written somewhere safely with yourself, so that even if you lose this one again, you will have all the details with yourself in handy.

How to Prevent Credit Card Frauds?

As much as you would want it, there is no checklist to avoid credit card fraud. You can only stay away from such unsuitable events to happen by staying vigilant towards the security of your credit card. Alongside, you may also do these-

  • Never share your sensitive card details like the CVV, card number, or PIN with anybody
  • Ensure that your card is always swiped only in front of you
  • Keep a check on your credit card’s report at regular intervals
  • Get your credit card updated from a traditional one to one with the EMV microchip
  • Immediately report any transaction that you are suspicious of
  • Inform your bank/credit card issuer as soon as you lose your credit card
  • Have all your credit card’s information written somewhere safely with yourself

Credit Card Protection Against Fraudulent Transactions

The guidelines laid down by the Reserve Bank of India state that the credit card holder will have absolutely zero liability in case of any fraudulent transactions or if there is any negligence on the part of the bank. However, in case there is any breach by the third party, it is the responsibility of the customer to inform the bank about the unauthorized transaction within 3 working days in order to avoid any liabilities in the future. If somehow, the customer fails to inform the bank about the same anytime before 7 working days, he/she would be held liable for the breach. 

To prevent such breaches in the future, card issuers have now started to provide an additional layer of security on credit card transactions with the addition of a PIN. If your credit card has a microprocessor chip, you will have to input a PIN number in order to approve the transaction. This ensures that your card is being used by no one else but you (or only the person who knows your PIN). So, even if your card gets stolen, it would not be used for any fraudulent purposes as the fraudster/thief would not be aware of the PIN that must be entered to approve the transaction.

Owing to this safety measure, all the traditional credit cards are now being replaced with EMV chip cards. An EMV (Europay Mastercard and Visa) card is safer as compared to a traditional card. A normal card would have all the user data saved on it, whereas an EMV card would generate fresh user data every time it is being used to make a purchase. This ensures increased safety by preventing the fraudsters/thieves from copying the user data and creating a new card with the same details.

Here’s How you can use your Credit Card Smartly

Credit cards are surely important, yet a delicate financial tool that lets you maintain a good credit score and healthy financial history. However, if you aren’t a frequent user of credit cards, then you need to be careful with their usage. We’ve crafted a checklist for you to follow if you aren’t a frequent user of credit cards-

  • Make sure to pay your credit card bills in time, and in full. Remember, every time you pay your bills late, your credit score gets affected significantly
  • Avoid paying only the minimum amount continuously; this will carry the remaining balance to the next month which will lead you to pay high interest on the pending amount
  • Keep away from buying things that are too expensive, even though you have credit left in your account. Doing so will keep you on the safer side and will not burden you at the time of repaying the credit amount
  • Remember, the lesser you spend, the better it is for your credit score. Try not to spend more than 30% of the credit limit on your card. This will eventually help you maintain a good credit score
  • Try not to withdraw any cash at an ATM from your credit card, as doing so will charge you heavy interest
  • Have all your credit cards details written down in a safe place, so that even if you lose your card someday, you will at least have all the details to report any theft or misuse immediately
  • Keep a record of all your credit card sales slips so that you can look at them and match them with your monthly statement. If, in case, you notice any discrepancies, immediately report it to the bank/credit card issuer
  • Before you apply for the credit card, read all the terms and conditions carefully and gain complete knowledge of the applicable interest rates, late fees, or any additional expenses, that may be applicable
FAQs
How to block a credit card?
As soon as you find that your credit card is misplaced somewhere, get it blocked in order to avoid any financial damage to your card. You can do so by contacting your bank/credit card issuer either by-
  • Physically visiting the branch
  • Online, using the bank’s mobile application or official website
  • Through customer care service
What should I do if there is any suspicious activity on my credit card?
As and when you report any suspicious activity, you must immediately report it to your bank/credit card issuer. You can either visit the bank’s branch or get in touch with them through their customer service support. Also, don’t forget to drop an email to your bank in order to have a written track of your complaint even if you have filed a complaint telephonically.
How is an AMV credit card different from a normal credit card?
An EMV (Europay Mastercard and Visa) card is safer as compared to a traditional card. A normal card would have all the user data saved on it, whereas an EMV card would generate fresh user data every time it is being used to make a purchase.
What is the CVV number on my credit card?
CVV stands for Card Verification Value. It is a three-digit number, which is printed on the backside of your card. The CVV number must be kept a secret as it allows you to make online transactions using your credit card.
Can I have multiple credit cards?
Yes, you can have multiple credit cards. However, it is advised to have only that many cards as you absolutely require. Having too many credit cards will make it difficult for you to manage the bill payments and/or your finances properly.
Is it safe to have a credit card?
Yes, it is absolutely safe to have a credit card. All you need to do is to use it carefully and keep a regular check on your bill payments, and statements.
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