What should you do if you believe your debit or credit card has been compromised? Yes, there are consumer protection regulations that can help. For example, the Electronic Funds Transfer Act (EFTA) and the Consumer Financial Protection Bureau’s (CFPB’s) “Regulation E” limit your liability for losses from unauthorized transactions.
If your debit or credit card number is used to make an unauthorized withdrawal from a checking or savings account, minimize your losses by contacting your bank as soon as possible. Your maximum liability under EFTA is $50 if you notify your bank within two business days after learning of the loss. If you wait longer, you could lose more, according to the law.
If your credit card number is used without your authorization, your liability is normally capped by the Truth in Lending Act (TILA) and the CFPB’s “Regulation Z” at $50 for all unauthorized transactions, and remaining credit card losses are typically absorbed by the card issuer. Some other worthwhile precautions you can take include:
Do not use ATMs in remote places, especially if the area is not well lit.
Go elsewhere if you see a sign directing you to only one of multiple ATMs in a location.
Shield the keypad with your hand when typing your PIN at the ATM or a retailer’s checkout area.
Regularly check your bank and credit card accounts for unauthorized transactions, even small transactions that you might think might not be worth reporting to your bank.
“Currency still has its place, despite the pervasive use of plastic.”
Today, it seems that more people are using credit or debit cards to pay for everything. And yet, this article provides reasons why cash may be a better payment option. Those include
A cashless society? Not so fast. According to a recent Federal Reserve Bank of San Francisco study, 40 percent of consumer transactions involve cash–a higher percentage than for debit cards (25%), credit cards (17%), electronic payments (7%), and checks (7%).
Currency comes in handy. Most vending machines don’t take plastic, and cash works best for all small purchases.
Hamiltons can’t get hacked. With data breaches of major retailers becoming common, some consumers pay by cash to protect their credit card information.
A cash fix can cost you. If you get a cash advance from an ATM outside your bank’s network, you’ll pay more than $4, on average.
Cash is a great budgeting tool. If you have trouble controlling your spending when you pay with credit cards, then cash or a debit card is best for your finances.
Paying by cash may be a good option, but it won’t help build your credit history. Using a credit card now and then for routine purchases can help build a good credit history.
Counting every penny on your credit and debit card statements can help detect fraud
Most people looking at their bank statements would probably notice if their credit or debit card were used without their approval to purchase a big ticket item, and they would quickly call their bank or card issuer to report the error or fraudulent transaction. But consumers are less likely to be suspicious of very small charges, including those less than a dollar…which is why criminals like to make them.
“These transactions might be signs that someone has learned your account information and is using it to commit a crime,” said Michael Benardo, manager of the (Federal Deposit Insurance Corporation) FDIC’s Cyber Fraud and Financial Crimes Section. “That’s why it’s important to be on the lookout for fraudulent transactions, no matter how small.”
He added, “When thieves fraudulently obtain someone else’s credit or debit card information and create counterfeit card, they might test it out with a small transaction—like buying a pack of gum or a soda—to make sure the counterfeit card works before using it to make a big purchase. If this test goes unnoticed, by the true account holder, thieves will use the card to buy something expensive that they want or that they can easily sell for cash.”
For most consumers, the biggest benefit of mobile payments is convenience. No need to pull out your wallet for cash or plastic—especially if you’ve got your phone at hand anyway. No need to type your payment information to buy online. But what if your financial and other personal information isn’t safe?
Security is important since you usually carry your mobile device with you, it’s on most of the time, and it may contain sensitive information. Consumer Federation of America (CFA) offers advice on how to avoid security pitfalls, what features keep your mobile device and your payments safe, and how to prevent others from making mobile payments without your permission.
While beneficiary, collateral, and fair market value are familiar to many, these terms can be especially confusing to those with limited English-language skills. In an attempt to assist various people, the Consumer Financial Protection Bureau has created the Newcomer’s Guides to Managing Money to provide recent immigrants with information about basic money decisions. These guides offer brief suggestions to those who are new to the U.S. banking system. The guides also include guidance for submitting and resolving problems with a financial product or service.
The Newcomer Guides include these topics:
Ways to receive your money, comparing cash, check, direct deposit, and debit cards.
Checklist for opening an account, to assist with starting a bank or credit union account.
Ways to pay your bills, providing guidance on whether to pay by check, debit card, credit card, or online.
Selecting financial products and services, providing assistance on deciding which financial services are right for various household situations.
Print copies of the guides can be ordered or downloaded. These publications are available to English and Spanish with additional languages to be offered in the future.
For additional information on money guides for newcomers:
Banks and card issuers have been sending out new credit and debit chip cards, usually as existing cards expire or need replacement. If you haven’t gotten your new cards, don’t worry. The rollout will continue at least through 2016. If you want to know when yours new chip cards will arrive, contact your card issuers at the phone numbers on your cards.
Your new cards look like your old cards with one exception. New cards have a small square metallic chip on the front. The chip holds your payment data—some of which is currently held on the magnetic stripe on your old cards—and provides a unique code for each purchase. The metallic chip is designed to reduce fraud, including counterfeiting.
Here’s how it works: To buy something in a store, instead of swiping your card, you’ll put it into a reader for few seconds. Then you might have to sign or enter a PIN. With each transaction, the chip generates a unique code needed for approval. The code is good only for that transaction. Because the security is always changing, it’s more difficult for someone to steal and use.
There will be no change in how you use your card online or by phone. That means chip cards won’t prevent crooks from using stolen card numbers to buy online or by phone. So it’s a good idea to still guard your card information closely, and check statements for suspicious activity. If there is a problem, your consumer protections remain the same.
College students often make financial decisions that can have consequences for years. Getting a student loan or credit cards can influence long-term financial success. Here are the ways to strengthen your decision-making skills:
Do your research before applying for a student loan. If you have to borrow to pay for some or all of a college education, review the different types of student loans. Choose one that’s low-cost and has a flexible repayment terms, which will generally be a federal student loan.
Understand the pros, cons and costs of debit and prepaid cards. Debit cards enable you to withdraw money from your checking accounts for purchases or cash. Prepaid cards are used to access money that has been loaded (added) onto the card, which is not connected to a bank account.
Use credit cards responsibly: While credit cards are a convenient way to establish a credit history, they can make it easier to spend money. Purchases that cannot be paid in full by the due date will incur interest
Credit reports, produced by credit bureaus, detail your financial history, and are used to develop credit scores. Under federal law, you can get at least one free report from each of the nationwide credit bureaus every 12 months. If you find an error, contact the credit bureau directly and correct the record.
If you cannot qualify for a regular credit card, consider a no-fee or low-fee secured credit card. This is a credit card for which you would keep money (as collateral) in a deposit account at the financial institution issuing the card. For example, if you want a card with $1,000 limit, you might deposit that amount into a savings account at the bank offering you the card. The lender would report how you manage the card to one or more of the credit bureaus, and often it will provide you the opportunity to obtain an unsecured credit card after a certain period of on-time payments. Secured cards may have fees attached to them and may have a higher interest rate, so be sure to do your homework before signing up.
To order your free annual report from the three major credit bureaus—Equifax, Experian, and TransUnion visit www.AnnualCreditReport.com or call toll free 1-877-322-8228.
You have the right to see and correct reports from “specialty” credit bureaus that, for example, track a person’s history of handling a checking account.
Bank reward programs tied to credit or debit cards or other products can provide you with appealing offers for things such as points to be used for travel and shopping or cash added to your account. But finding great deals is only half of the equation. Before jumping into any rewards program, consider these tips for maximizing the potential benefits and minimizing mistakes:
Comparison shop different rewards programs, including their fees and other costs, before deciding to apply for one.
Choose a rewards program that fits your lifestyle. The best way to maximize benefits and avoid spending problems is to choose a program that rewards you for purchases or deposits you would make even without the gifts.
Remember what it takes to earn rewards. Many credit cards provide rewards when you use them to make purchases, but it’s important to know exactly how much you can earn.
Why is it important for consumers to understand that to make the most of any rewards program, they need to make sure that they do not overlook other, more important account features in addition to the rewards?
Ask students to comment on the statement: “While rewards can be beneficial, don’t spend just to earn rewards.”
Where should you look for credit cards and other bank products that provide rewards tailored to your particular needs?
What are some of the perks that credit cards allow for their customers?
Does overall spending and debt accumulation increase among consumers who use a rewards credit card?
How many people are scammed into sending money or giving personal information each year? Answer: Millions!!
Types of Internet Fraud
Internet auction fraud—involves the misrepresentation of a product advertised for sale on an Internet auction site, or non-delivery of merchandise.
Credit card fraud—the unauthorized use of credit/debit card, or card number, scammers fraudulently obtain money or property.
Investment fraud—an offer using false claims to solicit investments or loans, or providing purchase, use, or trade of forged or counterfeit securities.
Nigerian letter or “419” fraud—named for the violation of Section 419 of the Nigerian Criminal Code, it combines the threat of impersonation fraud with a variation of an advance fee scheme in which a letter, e-mail, or fax is received by a victim.
Tips for Avoiding Internet Fraud
Know your seller – If you don’t know who you are buying from online, do some research.
Protect your personal information – Don’t provide it in response to an e-mail, a pop-up, or website you’ve linked to from an e-mail or web page.