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Protecting Yourself from Credit Card Fraud

About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C., area who works with clients virtually across the country. Dream Financial Planning is a Fiduciary Financial Planning firm specifically designed to help individuals in their 30s and 40s take control of their finances and fulfill their dreams. Feel free to schedule a Free Consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals. 

Credit cards have revolutionized the way we manage our finances. However, this convenience comes with its own set of risks, including credit card fraud. 

As technology advances, so do the tactics employed by cybercriminals to steal sensitive financial information. According to Bankrate, in 2021, the FTC dealt with nearly 390,000 reports of credit card fraud, with US losses projected to reach $165.1 billion in the next decade.1

Protecting yourself from credit card fraud is vital for financial security and peace of mind. Here, we’ll explore the various forms of credit card fraud and provide actionable tips to help protect your finances.

What is Credit Card Fraud?

Credit card fraud encompasses a range of illicit activities aimed at unauthorized access to your credit card information.2 This includes unauthorized transactions, identity theft, account takeover, card-not-present fraud, and more. Cybercriminals use tactics like phishing, skimming, data breaches, and malware attacks to access your sensitive information.

Credit Card Fraud vs. Identity Theft

While closely related, credit card fraud and identity theft target different aspects of your financial life. Credit card fraud involves unauthorized use of your credit card for purchases or withdrawals. Identity theft, on the other hand, is a broader crime whereby a criminal assumes your identity to open new accounts, apply for loans, or commit other fraudulent activities in your name. Both can have devastating consequences, including financial loss and damaged credit.

How to Protect Yourself From Credit Card Fraud

Here are some important tips for protecting yourself from credit card fraud:

Regularly Monitor Your Accounts

Routinely review your credit card statements and online banking activities, and immediately report any suspicious or unauthorized transactions to your card issuer.

Enable Account Alerts

Most financial institutions offer email, text, or push notifications. Set up alerts for large transactions, account logins, and balance changes to stay informed about your financial activity.

Secure Personal Information

Never share sensitive information, such as your social security number, PINs, or passwords, through email, phone calls, or text messages. Legitimate organizations will never ask for such information through these channels.

Use Strong Passwords

Create complex passwords for your online accounts, including a mix of uppercase and lowercase letters, numbers, and symbols. Avoid using easily guessable information, such as birthdays or names.

Embrace Two-Factor Authentication (2FA)

Enable two-factor authentication (2FA) for your online accounts. This adds an extra layer of security by requiring a secondary form of verification, such as a text message or separate login, in addition to your password.

Be Wary of Phishing Attempts

Cybercriminals often use phishing emails to trick you into revealing sensitive information or installing malware. Avoid clicking on links or downloading attachments from unfamiliar sources. Double-check the sender’s email address for authenticity.

Protect Your Devices

Keep your devices updated with the latest security updates and use reputable antivirus and anti-malware software. Be cautious when connecting to public Wi-Fi networks, as they can be vulnerable to hacking.

Check for Secure Websites

Before entering credit card information online, ensure the website’s URL begins with “https://” and displays a padlock symbol, indicating a secure and encrypted connection.

Use Virtual Credit Cards

Some credit card issuers or web browsers offer virtual credit cards with temporary numbers for online transactions, which adds an extra layer of protection by hiding your actual card number.

Regularly Check Your Credit Reports

Obtain and review your credit reports from major credit bureaus at least annually to spot any suspicious or unauthorized activity that may indicate identity theft.

By understanding the tactics employed by cybercriminals and following these tips, you can significantly reduce the risk of falling victim to credit card fraud. 

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Ongoing Financial Planning - Our most popular program now includes tax prep. This is a good fit if you have several goals and want the option to manage your investments. We'll cover everything from spending, insurance, taxes, investments, retirement planning, and estate planning, just to name a few. Our goal is to give you and your family an easy-to-understand comprehensive plan to provide you with confidence you're making the right financial decisions.

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Tax preparation is now part of the ongoing financial planning program. This will be in addition to the Tax Report we already generate for clients and our work with the IRS Withholding Calculator to help prevent our clients from getting a surprise tax bill.

Three-Hour Ask Me Anything - This is a good fit if you have 2-3 goals you want help with. These three one-hour meetings need to be completed within three months. The fee for this service is $2,000.    

Financial Coaching - Our financial coaching program starts at $99/month. This is ideal for someone who is looking to simplify and automate their finances. We'll also serve as an accountability partner and help you overcome obstacles that may be stopping you from accomplishing your goals. You can learn more about our coaching program here. If you think this program might be a good fit for you, schedule a 15-Minute Demo.

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This service is an ideal fit for parents of high school juniors and seniors with a standardized test score (ACT/SAT) and a list of colleges they're considering. This is included as part of ongoing financial planning or as a stand-alone package. This service includes:

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I hope we get the opportunity to work together. If you'd like to see if any of these services are a good fit for you, feel free to schedule a free consultation or send me an e-mail.

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  1. https://www.bankrate.com/finance/credit-cards/credit-card-fraud-statistics/
  2. https://www.law.cornell.edu/wex/credit_card_fraud

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