Key takeaways
- EMV chips offer more protection against identity theft.
- Use credit cards when making purchases and reserve the debit card for ATM withdrawals.
- Limit yourself to a major credit card—preferably one with chip-and-PIN technology—and a debit card.
- Report loss or theft immediately.
Traveling should be about relaxing, not worrying about theft. While recent advances in technology help protect your financial accounts, it’s still not foolproof. Here’s a rundown of the most recent changes as well as tips to help keep your cards secure.
Meet “Chip”
You may have noticed that your most recent credit card arrived with “chip technology.” This is the latest thing in credit card protection, at least for American consumers. It’s called an EMV chip—a smart card chip developed by Europay, Mastercard and Visa that is now in wide use among the major credit cards in this country.
The purpose of the chip is to make it much harder to duplicate than a card with a simple magnetic stripe because it contains more information and has a more complex structure.
Chips have been used for years in Europe and other foreign countries, but it took an October 2015 deadline that shifted liability for fraudulent transactions to any merchant or issuer who did not implement chip technology to finally get it adopted here.
The chip part of the card is inserted into the pay terminal. It exchanges a good deal of information with the terminal and the bank under a code specific to that transaction—more than the limited amount of information on a magnetic stripe, which can easily replicated through skimming.
In the U.S., the process is usually still completed just with a signature, as with the magnetic stripe verification, though the PIN technology in wide use abroad is also available. Implementing the PIN technology is more expensive both for issuers and merchants, so it may be some time before the U.S. transitions to full chip-and-PIN.
What does this mean for you?
The good news for travelers is that a chip card offers more protection against identity theft by card duplication. The bad news for U.S. consumers is that without the PIN to complement it, a lost or stolen card can still be used for unauthorized transactions.
Merchants in Europe and other destinations will generally accept a signature in conjunction with the card, but some will insist on a PIN. So you may want to get a chip-and-PIN card for traveling abroad.
The extra level of security with EMV chips is yet another reason to rely on credit cards to pay for most transactions when you travel. However, the extra protection provided by the EMV chip does not obviate the need for more traditional methods of protecting your credit card while traveling. These include:
- Take only the cards you need. In principle, you should limit yourself to a major credit card—preferably one with chip-and-PIN technology if you travel a lot—and a debit card for ATM withdrawals. But it’s also important to have a backup credit card in case the first one is lost or stolen, or your card is canceled by the issuer because of potentially fraudulent transactions, so that you can pay for purchases while awaiting a replacement card. Leave the backup card in a hotel safe while you’re out and about.
- Use credit, not debit, cards for purchases. Reserve the debit card for ATM withdrawals. Be alert to possible skimming at ATMs or anywhere else you use a debit card. For instance, a slip of paper protruding from the slot for your card may indicate an insertion to copy your magnetic stripe information. And don’t keep the PIN for your debit card anywhere near the card.
- Consider using a prepaid card. These are usually zero liability in case of loss and can help you control your expenses. The downside is that they often are loaded with higher fees than a normal credit or debit card.
- Check to see if your card charges foreign transaction fees. While you’re looking for a chip-and-PIN card, verify whether or not you’ll be charged fees for purchases made outside the U.S. It could make a substantial difference in the amount you’ll pay on a longer trip abroad.
- Keep a record of your card information in a safe place. That is, not in the same wallet or purse as the card itself, but in your hotel safe or tucked away in your luggage. This should include card number, expiration date, and CVV number as well as the 800 number (for U.S. travel) to report a lost or stolen card and the direct (non-800) number (for foreign travel).
- Keep your card in your possession or in your sight as much as possible. Restaurants in Europe, for instance, often equip wait staff with remote point of sale terminals so they can charge your card right at your table and not take it out of your sight.
- Inform your card issuer of your travel plans so they don’t look at a foreign charge as a probable fraud and cancel your card.
- Be alert. Watch out for pickpockets, especially if someone “accidentally” bumps into you or spills something on you. Be organized and don’t get flustered, even in situations when you’re under pressure, such as hurrying to buy a ticket to catch a train. Be sure to retrieve your card from any merchant or machine. Watch out for phony ATM machines, especially in highly frequented tourist sites or transportation terminals.
- Immediately report loss or theft to the issuer. Your liability is limited to $50 on most credit cards if you report the loss promptly. Many issuers are now offering “zero liability” cards as well.
