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Have you ever wanted to buy that certain something from the Internet, but hesitated because you were fearful of having your credit card number stolen?
How about that post transaction anxiety you felt after giving away your credit card information over the phone? Are you 100 percent certain the person on the other end of your call was legit?
After all, the person on the other end could be convicted felon serving seven years for breaking & entering or maybe that cute waitress was smiling at you for a reason since you didn’t see her swipe your credit card with a hand held credit card reader. (The latter has actually happened to me.)
Despite the constant assurances from those who rely upon our consumer dollars, I’m not completely convinced that our financial data is 100 percent safe after we “put it out there”?
I’m not saying this to frighten you in hopes of having you revert back to a cash-only policy. Far from it. I say these things simply because they are a reality when using debit/credit cards, and you should take as many proactive measures to protect yourself once your financial information leaves your hands.
Reduce your Risk with a Lower Credit/Spending Limit
I can’t control if Company XYZ has a hacker-proof firewall. Nor can I control what a waiter/waitress does with my credit card after paying for dinner. What I can do is use everyday common sense about when and where I relinquish my information, but also to take proactive measures to reduce my financial risk if my information is stolen.
My solution is quite simple: use a credit card with a lower than average credit/spending limit.
In my case, I have a credit card with a $1000 limit that I use almost exclusively for internet purchases (usually via PayPal), dinner at a restaurant, or making a purchase via telephone where a customer service representative takes my credit card number and three digit security code.
Why do I bother?
Because if the unfortunate situation ever arises where my credit card or credit information used against my will, the most money I stand to lose is $1000.
After that, the dirty bastard thief is capped at just $1000. Once he or she has hit my lowered credit limit, the credit card automatically shuts down, and my potential loss is minimal compared to my other cards.
This is, of course, the worst possible outcome. Hopefully, your credit card company will take your side after you notify them (or vice versa) that you didn’t buy $1000 worth Ozzfest tickets or drop $1000 at VictoriasSecret.com. If you’re like me, you probably have a fairly predictable spending pattern, and any out of the ordinary purchases should be easily identified as fraudulent.
Added Benefits of a Low Spending/Credit Limit
The prime benefit, at least for me, is peace of mind. As I mentioned, I had an instance in 2001 where a cute little waitress swiped both my debit card and my credit card (she claimed the first card was unreadable) with a handheld card reader. So not only did I have a $10000 maxed out credit card, I had zero cash in the bank.
To add to the stress of the event, I had just bought my first home and I had my first mortgage payment coming up in less than two weeks. I was sweating bullets, and fortunately, my financial institutions believed me when I said that I didn’t buy 100 tickets to Ozzfest.
If you’re the type to carry a credit card balance and you want to reduce your spending, a lower credit limit could also be the way to go. The less money you can borrow, the less you can spend. Pretty simple.
A Final Word of Caution
I would not suggest calling up your credit card company and asking them to reduce your limit from $10000 to $1000 (or lower) after reading this post.
A reduction in your credit limit can temporarily lower your credit score because it will reduce your available credit. If you don’t carry a monthly balance, it may not affect you, but if you do carry a monthly balance it could increase your credit utilization percentage.
If you want to use this technique, it would probably be more beneficial to call up your credit card issuer and have them create two separate cards where one card is your high credit limit card, and the new card is specifically designated for the “less than 100% secure” purchases.
It should be said that while this is not an optimal fix, it’s just one of several credit card hacks that I use to help me sleep a little better at night. As they the old adage goes… once bitten, twice shy.
What about you? Got any horror stories of credit card theft that you want to share? How did you resolve the issue, and how did it change your credit card usage?
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Image may be NSFW.
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Photo by Laen