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6 Tips on How to Protect Yourself From Credit Card Fraud

6 Tips on How to Protect Yourself From Credit Card Fraud

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This article originally appeared on ValuePenguin

Credit cards offer the most convenient way to pay for your shopping and for everyday transactions. In addition to convenience, your credit card gives you several other advantages. If you put in a little effort into selecting a credit card that best meets your needs, you can earn significant amounts as cashback benefits and rewards.

There is also the attraction of a free credit period. It is possible to pay for your purchase several weeks after you make it. Many Singaporeans value the flexibility that a credit card gives them. When they receive their billing statement they can opt to pay only the minimum balance and “rollover” the remaining amount.

Of course, using your credit card in this fashion will require you to bear a certain interest cost. According to Monetary Authority of Singapore data, there are almost 8 million credit cards in circulation and the rollover balance is a massive S$5.3 billion. Considering that the average interest rate on credit cards is about 25% in Singapore, this could be costing consumers hundreds of millions of dollars every year.

However, that’s not the only costs of using credit cards: credit cards are vulnerable to fraud. If you are not careful about how you use your card, your details can be stolen and used by other people. Thousands of dollars can be spent on illegal transactions before you even realise it. Although credit card issuers have sophisticated fraud detection techniques, there could be a situation where the fraudulent spends remain undetected and the final responsibility for payment falls upon you.

Credit card scams are common in Singapore

A global survey by ACI, a firm that provides electronic payment services to over a thousand large financial institutions reveals some startling facts. About a third of all credit cardholders across the world have been victims of fraud. The situation in Singapore is grim with 36% of the 2016 survey respondents saying that they experienced credit card fraud in the last five years, an increase of 8% compared to 2014.

ACI’s data reveal a sharp upsurge in credit card fraud across the world:

% of respondents who experienced card fraud in the last 5 years20162014% change
Mexico56%33%23%
Brazil49%30$19%
USA47%41%6%
Australia40%31%9%
India37%41%-4%
Singapore36%32%8%
Canada35%21%14%
South Africa33%30%3%
France29%26%3%
UK29%28%1%

Fortunately, there are several measures that you can take to protect yourself. Here are a few things you should should bear in mind when using your credit card to avoid getting into a credit card scam.

Your credit card usage practices could expose you to fraud

There are a few practices you can do to avoid experiencing a credit card fraud.

Tip #1: First, you should always lock your smartphone when you are no using it. Normally, it’s quite safe to do so because at most times your phone is within reach or on your office desk. But, if your unlocked phone happens to fall into the wrong hands, the consequences could be disastrous. Your credit card details and other personal information could be accessed within minutes.

Tip #2: Secondly, you should always shred (or at least rip up) your credit card statements before throwing them into the wastepaper basket. If you don’t, your trash could be a rich source of information for crooks on the lookout for details about your credit card account. They could use this data to help them impersonate you when they talk to call centre staff.

Tip #3: Thirdly, possibly the greatest mistake that some cardholders make is to write their PIN number on a slip of paper and store it along with their card. If you lose your wallet, it is highly likely that your credit card will be used to withdraw cash or make an illegal transaction since you have made the thief’s job so easy.

Tip #4: Lastly, another highly risky practice is to use a public computer to carry out an online transaction. Why shouldn’t you do this? Many people think that if they are careful about logging out after they complete their purchase, they are safe. But sadly, it is not as simple as that. Hackers often install a keylogger, which is a computer program that records every keystroke that you make, on public computers and public Wifi networks. If you use these devices to pay for things, your login information and your password will be instantly exposed.

Watch out for credit card skimmers

It is possible for a credit card thief to place a skimming device onto the card reader at the ATM or at a shop. When your card is swiped for making a legitimate transaction, the skimmer captures your credit card information. This data can be retrieved later and used to make purchases that will be billed to your card. It is even possible to make a duplicate credit card using the details captured by the skimming device.

Another technique to steal your PIN number is to install a small camera in the room where the ATM is located. The camera will record the number that you enter onto the keypad, giving the thief all the information that is needed to access your account.

Tip #5: Unfortunately, there aren’t that many things you can do to prevent this from happening. However, what you can do is regularly visit your online card statement to see if there are any transactions or cash withdrawals you did not make. If you find any discrepancies, you should make sure to dispute it with your bank. Since banks are supposed to catch these fraudulent activities ahead of time, they will likely reimburse you for your damage.

Revealing your credit card information on the phone

This is a common strategy used by con artists. You will get a phone call from a person pretending to be an employee of the bank that has issued your credit card. The caller will usually have some details about your card. This information will be conveyed to you so that you are convinced that the call is genuine.

Tip #6:Subsequently, the caller will ask for your password or your CVV number (the three-digit number located at the back of your card. This is used for authentication purposes.) You should always hang up on these phone calls right away. They are actually fairly easy to recognise, since they come in with a “hook” that will interest you in some kind of savings, deals or emergency. When someone asks for your confidential information, you could always hang up first and call your bank to see if they really wanted to reach you.

You can’t eliminate credit card fraud, but you can minimise your risk

Regardless of the measures you take, it is difficult to be one hundred percent safe from credit card fraud. But if you adopt a few basic precautions, it is definitely possible to lower your risk level as credit card thieves and con artists prefer easy prey. However, if you do happen to notice any unauthorised activity on your card, you must inform your bank immediately. A quick response can save you from financial liability and a lot of other trouble.

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ValuePenguin is personal finance company based in New York. DJ is responsible for building ValuePenguin’s presence in Asia, from researching personal finance topics in the region to building relationships with financial and media institutions. He previously worked as an investment analyst at leading hedge funds in New York including Cadian Capital and Tiger Asia. His expertise is in the global technology, consumer and financial industries. He graduated from Yale University with a degree in Economics, and speaks Korean, English and Mandarin Chinese.

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