Data compromises and security breaches have become a sign of the times. And when this happens in the world of credit and banking — from Equifax’s massive breach last year to the Capital One hack more recently — it’s only natural to wonder if your data is truly safe when opening or using a credit card.
But as personal finance and data security expert Adam Levin explains, despite the headlines, a credit card generally comes with protections that can help limit damage.
“Breaches have become the third certainty of life behind death and taxes,” says Levin.
It’s not a matter of if your information will be compromised, but rather how easy it could be for someone to use it against you. And, not using or applying for credit cards generally won’t exacerbate the damage. In fact, credit cards could help protect you thanks to fraud detection, zero liability policies, and other safeguards.
Using a credit card is still safer than using a debit card.
“The great thing about using credit cards as opposed to debit cards is that with a credit card, it’s their money. With a debit card, it’s your money,” says Levin. “The bottom line is that they will say they have a zero liability policy,” he explains, which can help get you off the hook if you find charges you didn’t make.
But a debit card won’t have that protection, as the money will come right from your accounts. Levin says, “It could take a few days to get it back. In the event this was money you needed for groceries, or to pay the rent on time, or your car payment, or your mortgage payment, that could be more than just an inconvenience, it could impact your credit.”
There’s a layer of added protection that comes with a credit card, and it’s one that might just be helpful if one of these breaches, or even something as simple as an ATM card skimmer, compromises your account information.
If you’re applying for a credit card, be alert and watch out for scams.
Levin’s top suggestion is to do your research, and make sure you’re applying through a true company website. Checking a site’s security is also important. “Make sure you see ‘https,’ which means the site is secure,” says Levin. “Make sure you see the little lock.”
His second piece of advice for those setting up online accounts right now? Lie on the login security questions. It can help add an extra layer protection in a world where information for these common questions can be all too easy to find online.
“Lie like a superhero,” says Levin. “Clark Kent, Superman, he never told people who he was, nor Bruce Wayne. The whole thing is if they ask you for your mother’s maiden name, lie.”
For those using credit cards, pay attention to your accounts.
Credit cards do offer that extra protection, so there’s no reason not to use them. Levin suggests that doing it the smart way and paying attention to your transactions is critical right now.
“Sign up for what’s called transactional monitoring alerts,” says Levin. “Each of the credit card companies and most of the financial service companies do it, and they do it for free.” This will help you watch your purchases, and allow you to respond quickly if a charge comes up that you didn’t make.
And above all, make sure that you’re using your credit card responsibly. While the Insurance Information Institute states that identity theft and fraud cost Americans $1.48 billion last year, credit card late fees alone, without interest included, amounted to $3 billion in 2018 according to a NerdWallet study.
“Governments failed us, businesses failed us. They have,” says Levin. “They have not put enough effort in our data. But remember, it’s not the government that says to you, ‘oh, click on that link you don’t know.'”
Other benefits to using credit cards
Beyond fraud protection and zero liability benefits that can shield you in the event of fraud, there are upsides to opening and using a credit card.
Earning rewards on your spending is one upside, with cards offering sign-up bonuses as well as bonus points for ongoing spending. But opening a credit card and using it responsibly — paying off your balances in full each month — can be a valuable tool in building good credit.
It all comes down to taking an active role in managing your privacy, and holding yourself accountable when it comes to credit cards and other financial tools. “We as consumers are responsible, like it or not, for managing our credit and our identity, because no one knows better than we what we’re doing,” says Levin.