I was doing some research the other day on the Home Depot credit card breach, and it blew my mind to learn that 43 percent of companies have had a data breach in the past year.
According to ID Theft Center there were 4,816 major breaches between 2005 and September 23, 2014, with a total of 667,201,105 records stolen. That is not even including last week’s Jimmy John’s breach! With figures like this it’s easy to panic. For every American that is 2.1 stolen credit cards.
Unfortunately, it seems that credit and debit card fraud and major retailer breaches are just a part of our everyday life now. As we see these attacks continue and hit us faster and faster, the best thing you can do is to be informed on how to minimize the damage it can do to you and your options for avoiding it altogether.
- Pick the right kind of card – credit vs debit
These thieves are stealing credit and debit card information from people, but these two types of cards can have very different impacts on your cash flow. When your credit card is stolen, by Federal law the consumer is only liable for up to $50. On top of that, when you report it stolen the credit card company will typically quickly remove the fraudulent charges so you can continue your spending as normal.
Debit cards are a different beast. For debit cards you are responsible for $50 if you report a fraudulent charge within two days. If you report it after two days you are liable for up to $500, but only as long as you are reporting it within 60 days. After 60 days, you have unlimited liability for any fraudulent charges made on your debit card. You read that right. The bank might not help you if someone steals directly from your bank account and no one notices until 61 days later.
On top of having higher liability issues, while credit cards will reimburse you quickly, you are more likely to have to wait to have fraudulent debit card purchases removed. Typically it takes about two weeks for a bank to reimburse you for a fraudulent charge, and during those two weeks you will still need to pay your bills. This can obviously really leave people in a lurch.
I would suggest with the flood of breaches recently that people use credit cards over debit cards. Remember, you can always use your credit card like a debit card, and should not be spending more than you have on hand.
- Be vigilant
The first step does not stop you from being immune to these large corporate breaches, so instead you have to remember to be vigilant. You should really check your credit and debit card statements daily. Many of these credit card companies and banks have apps, making it easy to take a look over these accounts while you are on the go.
Another option if you have accounts in many different places is to use an online account aggregator like Mint.com. These are services that allow you to pull in the information from your different financial accounts into one place so that you can track your spending, saving, and more. That way you can log into one account to check (hopefully) your spending on your credit and debit cards in one place, rather than opening several apps to check everything.
If you are looking into getting a new credit or debit card, get a “chip and PIN” card. These are cards that, rather than using a magnetic strip on the back that is easily stolen, use a microchip that makes it harder for thieves to steal. By 2016 these will most likely be the most prominent kind of card, but you can get a leg up now, and save yourself a future headache.
- Lock it up
If you are still nervous about having your credit or debit card information stolen, you should look into Lifelock. This is a service that several of my clients use, and they swear by it. These guys actually watch all your accounts for you, so when a purchase is made that doesn’t follow your normal pattern they attempt to alert you immediately.
The last step you can take in defense from credit card fraud might just be the easiest. Go back to just carrying cash. I saw in a newscast on the Home Depot breach that many customers are just using actual cash. It’s a tried and true method, and it’s much less likely to get into the hands of Russian hackers than your credit card information.
Certified financial planner Wes Moss offers financial and accessible investment advice to Atlanta Bargain Hunter readers.
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