Dealing with Credit Card Fraud

I am not here to tell you how to avoid fraud in the first place because those articles are plentiful. But, no matter how careful you are, you are going to encounter fraud. I think I have had fraudulent changes levied against me 4 times now. In every case, the credit card caught it immediately, called me, and deactivated the card, and sent me a new card with a new account number. I was never out any money.

However, I do have a half dozen or so automated payments post to my credit card every month, AT&T, State Farm, Duke Energy, etc. The fraud is not coming from these places, but when I am forced to get a new card, I have to go update all the automated payments. Worse, if the deactivation happened on the day one of these payments was supposed to post, it could cause bigger problems. So, here is what I did:

I use 2 credit cards, from different banks. I have a credit card from Citibank that is my every day card, which I call my “carry card” because it is carried in my wallet. This is the one that will get hit with fraud because it is the one that is out of sight when I give it to the waitress, used on a website, or used in a gas pump outfitted with a skimmer. But, if that card gets cut off, no big deal. The existing charges still stand, and a new card usually comes in a couple days.

The second card I call my “home card” because it never leaves the house. For this one, I use a card from Chase. I only use it for recurring transactions with trusted vendors. I have NEVER had fraud on that card.

So, what about the 3 day period while waiting for the new card. Ah, then it is important to have a 3rd card that never gets used, but is also carried. I call this my backup card. I think I have a Cabela’s Rewards card for this one. It is important to use this card once a while just to keep it active. I usually buy gas or something every 9 months or so, just to keep the card active.

I pay my credit cards in full every month. That means I always have 2 credit card payments to make, and 3 that one month when I use my backup card. One thing you can do is either stagger the due dates so you spread the payments out over the month, or maybe align the payment dates so you only have to pay bills once a month, the choice is yours, but credit card companies will usually let you change your billing cycle date, just ask.

If you don’t pay your cards in full, then you should ONLY carry a balance on your carry card. Your home card should have only have relative steady monthly charges. If you don’t have the cash flow coming in to cover your normal monthly expenditures, then fraud is not your primary concern, you need to learn how to budget.

The other thing I do, is not have all my cards with the same bank. I haven’t heard of this, but it would be possible for Chase (for example) to have a server meltdown and temporarily stop processing cards, so having your carry card and backup card at the same bank is not a good idea. Personally, I have had a good experience with both Citibank and Chase, and their cash back rewards cards are both excellent, so those are the two primary cards I use. My backup card is from a smaller institution, and maybe even my local bank or credit union. I do prefer to have a card associated with one of the little guys just as a little extra security.


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