10 Tips to Avoid Credit Card Fraud

These are tough financial times we are living in. People are struggling and so are the banks. Regrettably, this has seen an increase in credit card fraud and these numbers are growing year on year with no sign of a slow down. It is time to take credit card fraud seriously, because criminal gangs certainly are.

credit card fraud
credit card fraud photo credit: rosengrant

There are many ways you can minimise your personal risk and keep your data safe and secure. Below are 10 habits to adopt in order to reduce your risk of being victim of a credit card scam.

Protecting Yourself Online

As high-speed broadband continues to spread, we are turning increasingly to the internet for our shopping fix. While high street stores languish in the recession doldrums, online stores are doing a roaring trade. With this increase of online buying activity, come increased opportunities for credit card swindles. The following tips will help protect you online.

1. Use A Credit Card

When shopping online, use a credit card instead of a debit card. Many of the best credit cards offer additional protection services for online purchases that debit cards do not. Credit card companies have internal fraud departments like ANZ Falcon set up with the experience necessary to assist you should there be any suspicious activity on your account.

2. Employ Strong Passwords

Do you have the same password you have used for years? Do you use it for everything? You aren’t alone. However, by doing so, you are leaving yourself vulnerable. Mix up your passwords. Make sure they use a combination of letters and numbers plus a mixture of upper and lower case letters. And plan to change your passwords on a regular basis.

Of course it can be hard to remember all of these various passwords, so if you do keep a list, be sure that it is kept in a very secure location (a home safe or a password protected file on your computer). Even better, use a secure password manager for your PC or Mac.

3. Be Careful With Social Networking

The Facebook phenomenon continues to gallop ahead bringing with it Plaxo, Twitter, LinkedIn and myriad other social networking sites. Be cautious about the amount of personal information you post publicly on these sites.

A scammer can build a fairly comprehensive profile of you by picking up your birthdate from one site, your email from another, your personal phone number from somewhere else and your address for another source. Soon they have enough information to assume your identity.

Don’t let it go that far. Be judicious with your personal information and avoid the risk of identify theft.

4. Be Aware Of Phishing

Have you ever received an email from what appears to be your bank asking you to follow through a link and enter your password or banking details? If so, that was likely an attempt at phishing.

Phishing is a particularly nasty criminal online activity which involves deceiving you into believing it is an official notice from a bank, government agency, social networking site or other official source. It will often ask you to click through a link and provide sensitive information. It is highly likely that it is actually stealing valuable personal information.

Before you provide any information in this way, it is always a good idea to look up the phone number for the agency in question and phone them to confirm if it is a legitimate query. In almost all cases your bank or any official agency will not contact you in this way.

In order to protect yourself from phishing scams you are advised to keep your computer operating system up to date and to use antivirus and antispyware software on your computer. It isn’t enough to download this software once you must keep it up-to-date as there are often frequent updates to protect against new viruses and scams.

Protecting Yourself Offline

It isn’t just our online activities which leave us vulnerable to fraud: there is plenty of scope in our day-to-day life to get ensnared in a credit card scam. Take these precautions to guard yourself in your everyday activities.

5. Shred Sensitive Documents

Buy a shredder and use it religiously! Sadly there is enormous amount of sensitive personal information in your rubbish or recycling bin. Bank statements, credit card bills, credit card offer letters, tax statements & these can all be used by crooks in assuming your identity. It only takes a couple of documents before someone else is able to start to hijack your personal identity and credit record. Shred all documents before they leave your home.

shredded paper
shredded paper photo credit: venturist

6. Review Statements Thoroughly

How many people actually read through their monthly financial statements? Thoroughly? Many don’t. Some don’t even open the envelopes. The quicker you catch fraudulent activity, the faster it can be resolved. If left unattended, the problem can snowball quickly.

Open all statements and read them carefully looking for transactions you don’t recognise. If there is anything untoward, query your financial institution immediately.

7. Check Your Credit Report Regularly

Anytime you apply for credit, whether it’s a home loan, a credit card or even a mobile phone account – they will check your credit report to see if you are ‘credit worthy.’ It is imperative that the information held by the credit reporting agencies is correct.

Every adult should make it a habit to check their credit report at least once per calendar year. In Australia there are two main companies: Dun & Bradstreet and Veda Advantage. You have the right to request your credit Report for free, which takes several days to arrive, or for a small fee to get it faster. When you receive your report check it over carefully.

If anything appears out of order (name, address, outstanding debts), contact the agency for information about how to challenge and correct your credit report.

8. Lock Your Mailbox

If your mailbox does not have a lock, then get one. Mail theft is one of the starting points for any kind of credit card fraud or identity theft. Keep your mailbox locked in order to keep your mail out of someone else’s hands. When you move, it is a good idea to have your mail forwarded for at least one year. It’s a small price to pay to know that all of your mail follows you to your new destination.

If possible, opt out of junk mail, in particular credit card offers. If an offer for a credit card is diverted into the wrong hands they can complete the application in your name and begin a spending spree on your credit. Stop the offers and monitor your credit report to track any credit applications made in your name.

9. Don’t Take Your Eye Off Your Card

In restaurants and shops you never want to take your eye off your credit card. If they tell you the machine is in the back, then offer to accompany them to swipe your card and process the transaction. Once your card is out of your sight, it is far too easy for them to copy the numbers down by hand or to use a cloning machine to steal your credit card details.

You are the consumer and it is your credit card, so don’t allow a merchant or restaurateur to dictate the rules of engagement to you! Keep your eyes on your card at all times.

10.Always Shield Your PIN

When entering your PIN number at ATM machines or on credit card key pads, use your other hand to shield the keypad from view while you enter your PIN code. Credit card scams have been known to use spy cams and over-the-shoulder spies (or shoulder surfers) to capture your PIN number. Don’t make it easy for them.

10 thoughts on “10 Tips to Avoid Credit Card Fraud”

  1. I do use a debit VISA card, tied to my general account. I have email/SMS alerts set on my bank accounts which my bank offers as a free service. When I use my VISA card, within minutes there is an alert detailing the transaction. It distingushes between authorisations & withdrawls, includes the amount & the name of the party requesting the transaction. V. handy tracking tool as it’s far more pro-active than checking statements.

  2. i like the part when you pointed out social networking, identity theft is really one of the serious issues we have right now. i have a friend who was a victim of this and so she has to delete and worst is she have to cut her CC accounts because of this. so sad, but don’t you think our government can just let this pass by? i mean, they have to do something about this.

  3. Number 1 is false. Visa and Mastercard offer the exact same Zero Liability policy regardless if it is credit or debit. Under no circumstance are you liable for someone fraudulently using your debit card.

    How about actually closing all the stupid credit cards? They are not necessary and are in fact an impediment to building wealth.

  4. Great article.

    I knew about these things but we all tend to forget. I have bookmarked your article for reference.


  5. I think i know this picture.

    In my company, once a month, i also have to shredder some secret papers like on the picture.

  6. Recently someone frauded with my credit card. When I checked my online credit card report I noticed that the credit card was used to its fullest limit (while I don’t use it very often myself). I claimed the money back by my Bank and luckely they paid me back because it was clearly a fraud case. But since then, I’m a lot more carefull with using my credit card on the internet. My best tip is to keep your PC free of viruses and spyware because I think that was what they used to get my credit card information.

  7. I used to work for washington mutual credit cards before, and you won’t believe the number of fraud and identity theft claims we get everyday. and a comment on number 3 – credit cards are not an impediment to building wealth, credit cards allow you to gain capital for business at a lower rate (assuming you keep you sh*t in order). businesses are built on borrowing at a lower rate, earning income, paying off debt, rinse and repeat.

  8. Phishing is perhaps the most difficult to describe to other people. The only real way to learn is to view some phishing examples to become familiar with the tiny subtle clues that will tell you if a website or an e-mail is genuine or not.

  9. Excellent article!
    In my opinion the use of credit cards should be avoided to the maximum. I just have a credit card because my bank gives me some benefits.
    But I only use the credit card online… and I had been victim of a fraud. Fortunately, VISA international blocked my card and gave me back the money.

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