Why is there a square metallic chip on my credit card?
Card issuers are adding extra security to reduce fraud.
You may have noticed a new shiny addition to your credit or debit card. This chip has been added as a nationwide effort to reduce fraud and counterfeiting. Why is this important? In a recent world-wide survey targeting card holders (debit, credit and prepaid), 27 percent reported having experienced fraud in the past five years.
In addition, while fraud rates vary across countries, Mexico and the United States are more prone to card fraud.
So, how does this chip held reduce fraud? When a consumer makes a purchase with a chip card, they will put the card into a reader for a few seconds, instead of swiping it. This process will assign a unique security code to “each” purchase, making it more difficult for a thief to steal. Keep in mind, that when using a chip card you may be prompted to sign or enter a PIN.
New cards with the chip are already being issued by banks and card issuers, and are often sent when cards expire. Chip cards will be issued throughout 2016, however if you want to know when you can expect your new card(s) contact your card issuer at the phone number listed on your card.
(Tip: New scam alert targeting consumers who have not yet received their chip cards! Be cautious of scammers posing as card issuers, who send emails claiming that you must update your account in order to receive your chip card. To learn more about this scam, visit the Federal Trade Commission).
Keep in mind that shopping online or by phone with a chip card will remain the same, so still be cautious about protecting your card number. Per the Federal Trade Commission, consumer protections will remain the same with chip cards. Don’t forget, an easy way to monitor your credit history and protect your identity is to obtain your free credit reports. You are entitled to one free credit report from each credit bureau (Experian, Equifax and Trans Union), every 12 months. Visit www.annualcreditreport.com to learn more.
Michigan State University Extension offers financial literacy and homeownership workshops throughout the year to help you become financially healthy. For more information of classes in your area, please visit either the MSU Extension events page or MI Money Health website. Additionally, you can take the Financial Health Survey at MI Money Health to access if you’re financially healthy and discover more ways you can improve your financial health.