Big Changes Coming to Your Wallet
It may be comforting to know that if your credit card is stolen or hacked, most companies will not hold you liable. This is great news for the consumer, but bad news for credit card companies.
Every year, credit card companies in the U.S. lose billions of dollars to fraud. And these numbers are only growing:
- $3.2 billion in 2009
- $3.6 billion in 2010
- $4.8 billion in 2011
- $5.5 billion in 2012
- $7.1 billion in 2013
What makes these numbers even more dramatic is the fact that globally, the cost of credit card fraud is about the same. For every dollar the U.S. lost to credit card fraud in 2013, the rest of the world lost $0.98. What are other countries doing that the U.S. isn’t?
One security measure that many countries around the world take is the use of the card chip, or EMV. Unlike the magnetic strips that are on American credit cards, the chip card is actually a little computer that stores your account data more securely and makes it difficult to copy. Many European countries have been using the card chip for a decade.
But U.S. credit card companies are catching on. Millions of Americans have already received new credit cards in the mail with the EMV chip. By autumn, companies are hoping the magnetic strips will be completely replaced. Major credit cards that are participating include American Express, Visa, and MasterCard.
All chip cards still come with a magnetic strip, so if a chip reader is unavailable with retailers, you can swipe the card. However, if a retailer has a chip reader, consumers are encouraged to use it. To use the new chip cards, insert them into an ATM-like slot. Once in the slot, wait a few seconds and remove. Even though several stores do not have the equipment to read these cards now, Visa estimates that 50% of retail stores will carry readers by the end of this year.