How to Prevent Credit Card Fraud
Your financial liability might be limited, but dealing with fraud is still a huge hassle. Fortunately, there are preventive steps you can take.
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First, the bad news: There’s no clear-cut way to prevent credit card fraud from ever happening at all. Your bank may be able to stop it before it goes too far (financial institutions have long been using artificial intelligence to pinpoint likely instances of fraud), but it also helps to proactively keep an eye on your account activity.
Now, some good news: Even if someone successfully steals your credit card information and begins to rack up charges, most credit cards offer zero-liability policies, and federal law limits your liability to $50 at most. In other words, report fraud when you notice it and you’ll get those charges removed.
Still, it takes time and effort to discover the issue, report it to your credit card company, wait for a new card to be delivered and revise autopay accounts linked to the stolen card number. There’s an emotional component, too — a feeling that your privacy has been breached.
Limiting your vulnerability can help you avoid these issues. Here’s how to do that.
Keep an eye on your financial activity
Look for unusual credit card charges
Look over your credit card statements whenever you pay your bills (or, if you use autopay, set a reminder to look at them once a month). An unexpected charge, even one as small as a few dollars, may be the first sign that your information has been compromised.
Make sure your credit reports are error-free
Periodically look over your credit reports to make sure everything there is accurate. If you spot errors or unfamiliar accounts, you can dispute them with the credit bureaus. You can get free reports each week from the three main credit bureaus at AnnualCreditReport.com.
You can also freeze your credit with each credit bureau to prevent someone else from trying to open accounts in your name, and lift the freeze whenever you need to apply for a credit card or other loan.
Set up alerts
You can opt into alerts when you’re logged into your credit card account online or through the bank’s mobile app. In addition to getting a text or email when your bill is due, you can also be notified whenever your card is used or whenever your balance reaches a certain amount. Those alerts can help you spot unusual charges or an unexpected increase in the amount you owe.
Safeguard your information
Secure your phone and wallet
Choosing strong passwords and using two-factor authentication for accounts is important, and that’s just one way to protect your financial information.
Think of all the financial accounts you access through apps. Set your phone up to lock and require a passcode or biometric identification, like a fingerprint or your face, to unlock. According to an October 2023 Pew Research Center report on how Americans view data privacy, 16% of smartphone users don’t do this. If your phone gets lost or stolen, you don’t want to make it easy for someone to gain access to everything on it.
Protect your physical cards, too. Carry your wallet in your front pocket, and if you use a purse, keep it zipped up. Don’t hang your purse from the back of your chair in a restaurant. Don’t carry your Social Security card in your wallet, either. Leave it at home in a safe location.
If one of your physical credit cards is lost or stolen, you can easily lock the card through your bank’s app to stop future charges.
Be cautious when out in public
Don’t log into your financial accounts using public Wi-Fi. Use your cellular data plan or wait until you’re home and able to use your own password-protected Wi-Fi. And if you are doing any financial tasks in public, whether you’re on your phone or computer or filling out a paper form, make sure no one’s peeking over your shoulder.
I was once on a flight where flight attendants advertised the airline’s credit card and handed out paper applications. The passenger across the aisle from me filled one out and then left it face-up on her tray table for hours. From where I was sitting, I could clearly read her name, address, birth date, Social Security number and other information.
Be a skeptic
Regard any phone call, email or text message from someone claiming to be your bank as suspicious. Never provide your personal information to anyone who contacts you out of the blue. Look up the bank’s official customer service number on its website, and call to ask if representatives were actually trying to get in touch with you. If you receive a text or email asking you to click on a link, don’t.
Scams like these can seem very real, and anyone can fall for one, no matter how tech-savvy you may be.
Shop securely
In addition to making sure you’re shopping on a more secure site (look for “https” and not just “http” at the start of the site’s address), you can use ways to shop that don’t require you to hand over your actual credit card number.
A virtual card number allows you to use a randomized code in lieu of your actual credit card number. It can be used for a one-time purchase, or saved with a specific merchant for multiple purchases. You can generate one through your card issuer, Google Chrome, Click to Pay or through various apps.
Digital wallets like Apple Pay and Google Pay use similar technology where your actual number is kept secure during purchases.
Use different cards for autopay vs. everyday spending
Consider designating one of your credit cards to be used only for autopay accounts, such as cell phone bills and subscriptions. Then leave that card in a drawer and don’t use it for anything else. That way, this just-for-bills credit card is not in the wild being processed by retail clerks and restaurant servers, or being swiped through gas station pump readers. Use other payment cards for everyday spending.
This technique won’t prevent fraud on your everyday spending card, but if one of the cards is breached, at least you won’t have the hassle of changing your autopay accounts and potentially incurring a late-payment fee.
Generally, it’s a good idea to keep a record of where your credit card number is stored. Increasingly, banking apps are allowing you to see which merchants have them on file.
Think twice about paying for anti-fraud services
Credit monitoring services seem to claim to protect you from identity theft, but they don’t. They alert you after it happens. Overall, they don’t do much more than you could do yourself. Besides, as a practical matter, you’re not liable for fraudulent credit card purchases, which reduces the incentive to pay extra for insurance or a service.
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