Understand your credit card

Card design

Whilst the industry sets technical standards – like flexibility, flammability, toxicity (some people are allergic to some plastics) - the actual design is up to your card issuer. It can be as straightforward or unusual as they like

Chip

As can be seen in the figure above, the chip is actually a Golden coloured electronic chip on the left side of the card under the name Goldfish, and this is what is used in the so-called chip-n-pin. The chip or microchip, embedded into a debit or credit card, provides highly secure processing capabilities to carry out the card transaction, and that includes verifying that the correct PIN has been used. In addition to holding the same personal data as that on the magnetic stripe (i.e. cardholder name, card number and expiry date), the chip provides additional security features to safeguard against counterfeiting. The four digits of your PIN (personal identification number) are not held as a set of numbers on the chip.

Card scheme logo

As can be seen in the card design above, the logo may be wither of Mastercard, Visa, Visa Electron, Switch, Solo, Amex, Discover, etc.
This tells you which card scheme will be responsible for clearing payments and, where the symbol is displayed, which retailers will accept your card.

Hologram

The flashy silver colour hologram just under the Scheme logo.
An additional security feature to identify that the card is genuine

Expiry date

Along with the card number the card’s expiry date is essential to process a card payment.

Your name

The cardholder’s name is displayed at the bottom of the card.

Card number

Generally 16 digits but can be up to 19 – this identifies your account, with the first six digits comprising what is known as the BIN (Bank Identification Number) and this identifies your card issuer and the card scheme.

Previous Article: Different kinds of Credit Cards

Card design

Whilst the industry sets technical standards – like flexibility, flammability, toxicity (some people are allergic to some plastics) - the actual design is up to your card issuer. It can be as straightforward or unusual as they like

Chip

As can be seen in the figure above, the chip is actually a Golden coloured electronic chip on the left side of the card under the name Goldfish, and this is what is used in the so-called chip-n-pin. The chip or microchip, embedded into a debit or credit card, provides highly secure processing capabilities to carry out the card transaction, and that includes verifying that the correct PIN has been used. In addition to holding the same personal data as that on the magnetic stripe (i.e. cardholder name, card number and expiry date), the chip provides additional security features to safeguard against counterfeiting. The four digits of your PIN (personal identification number) are not held as a set of numbers on the chip.

Card scheme logo

As can be seen in the card design above, the logo may be wither of Mastercard, Visa, Visa Electron, Switch, Solo, Amex, Discover, etc.
This tells you which card scheme will be responsible for clearing payments and, where the symbol is displayed, which retailers will accept your card.

Hologram

The flashy silver colour hologram just under the Scheme logo.
An additional security feature to identify that the card is genuine

Expiry date

Along with the card number the card’s expiry date is essential to process a card payment.

Your name

The cardholder’s name is displayed at the bottom of the card.

Card number

Generally 16 digits but can be up to 19 – this identifies your account, with the first six digits comprising what is known as the BIN (Bank Identification Number) and this identifies your card issuer and the card scheme.

Previous Article: Different kinds of Credit Cards

Different cards or Plastic Cards

Plastic cards are the UK’s favourite way to pay.

Spending on plastic cards overtook cash in 2004 and has continued growing ever since. Plastic cards allow us to pay for goods and services virtually anywhere in the world, easily and conveniently, and provide a more secure alternative to cash and cheques.


Debit Cards

When you use your debit card the money you spend is taken directly from your current account. As long as you have enough money in your account you can use your debit card to buy things in person, over the phone, by mail order and over the internet. It also enables you to withdraw money direct from your account, and may have a cheque guarantee and cash machine function.

Credit Cards

A credit card allows you to pay for goods and services with credit up to a limit agreed with your card issuer. You have to pay back what you borrow - the costs, terms and conditions will vary from card to card and interest is normally charged.

Charity/Affinity Cards

Some credit cards are issued on behalf of charities and other organisations like football clubs and universities. For this type of card the card issuer usually makes a donation to the charity or organisation when the card is issued or each time that the card is used — at no additional cost to you.

Charge Cards

These are similar to credit cards. They allow you to pay for goods and services on interest-free credit but whatever you borrow must be paid in full at the end of a specifi ed period, usually every month or you may incur fees.

Cardholders may be charged an annual fee.

Store Cards

Store cards are a type of credit card.
They can be used in fewer places, often only in the individual shop or chain that issued it. Interest rates on these cards tend to be higher than on standard credit cards and credit limits tend to be lower. However, many shops provide special offers to their cardholders.

Previous Article: Checking your Credit Card Statement

Checking your creditcard statement

You should always check your statement thoroughly every month. Take care to review all of the transactions listed against your receipts. Make sure you can account for all the transactions and that they are all for the correct amount

Disputed transactions

If there’s a problem with goods or services you bought you should fi rst try and resolve it with the retailer. If they can’t or won’t help you – perhaps because they have gone bankrupt – you have extra protections in law when you buy on a credit card.

Under Section 75 of the Consumer Credit Act your credit card company has joint responsibility with the retailer for transactions over £100 in cases where there is a breach of contract or a misrepresentation – so you may be able to get your money back from your credit card company.

Mistakes & fraud
If you spot fraud or a mistake on your statement tell your card company immediately. You will still have to pay for any purchases that are not in dispute but your credit card company will usually freeze the transaction you are questioning. They will refund the actual transaction, and any interest automatically applied to your account, if there has been an error or you have been an innocent victim of fraud. These guarantees are provided by The Banking Code.

Paying off your credit card

Your statement will tell you how you can pay off what you owe, for example using cash, cheque, debit card, telephone or internet banking, and what time you should allow to make sure the payment is received by the due date. This can differ between card issuers so it is worth following the advice carefully.

Your credit card company may also let you set up a direct debit. It’s a good way of making sure that you don’t miss a repayment and avoiding any late payment charges.
However you decide to pay remember to plan ahead to make sure your payment reaches your credit card account by the payment due date.

How much is my card costing me?

Your statement can tell you. The three key things that affect how much your card costs you are:
1. How much you borrow
2. Your interest rate – different kinds of transactions may incur a different rate of interest and you should also check to see when your credit card company starts charging you interest
3. How much you repay and how quickly you repay it

Previous Article: Understanding your Credit Card Statement

Credit card statement

Your statement is your guide to your credit card. It tells you everything you need to know about your account since your last statement, the total amount you owe, any interest owing on what you’ve borrowed and the minimum repayment you have to make that month.
Here we detail some of the common features and terms included on a standard credit card statement. If you require any further explanation about the information contained on your credit card statement or spot any suspicious transactions, please be sure to read the ‘getting help’

Outstanding balance

The outstanding balance tells you how much you owe in total.

Minimum repayment

Most companies insist you make a minimum repayment each month if you owe money. If you only ever make the minimum repayment it will take you longer to pay off your debt and will cost you more – it’s not recommended.

Payment date

This tells you the date by which your payment must be received by your credit card company. It will need to be sent a specific number of working days in advance of the payment due date, depending on what repayment method you use. Your statement will advise you how soon in advance of the payment due date your payment needs to be sent. If you don’t pay at least the minimum amount requested you may incur charges and damage your credit rating.

Your card’s APR

The APR (Annual Percentage Rate) gives you a measure of the total cost of borrowing on your credit card over a year. It can be a good way to compare the prices of different credit cards as generally the lower the APR the less interest you will have to pay.

Interest rates, fees & charges

This shows you the interest rates for different types of borrowing. For example, the interest rate for purchases in a shop may be different from the cost of getting cash out of a cash machine

Previous Article: What is APR: Definition of APR

What is APR? Definition of APR

APR stands for the Annual Percentage Rate of charge. You can use it to compare different credit and loan offers. The APR includes important factors such as:

• the interest rate you must pay;
• how you repay the loan; the length of the loan agreement (or term); frequency and timing of installment payments; and amount of each payment;
• certain fees associated with the loan; and
• Premiums for payment protection insurance that the lender chooses to make compulsory.

All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender. Generally, the lower the APR the better the deal for you, so if you are thinking about borrowing, shop around.

Example 1:

If you borrow £1,000 for one year at 20% interest, and at the end of the year you repay a lump sum of £1,200:
• you will be paying an interest rate of 20%; and
• the APR will also be 20%.

Example 2:

If you borrow £1,000 for one year at 20% interest, and pay throughout the year in equal monthly installments (12 x £100 = £1,200),
• you will still be paying an interest rate of 20%; but
• The APR, however, will be roughly 40%.

Example 2 is more expensive because you are paying back the £1,000 gradually throughout the year. In Example 1 you have the benefit of being able to access the £1,200 for the whole year, which you could invest and earn interest on. By paying in instalments you're losing out; this increases the cost of the loan - hence the higher APR.

Questions to ask the lender

If you find a deal with a low APR, ask the lender the following questions:
• Does the interest included in the APR vary, or is the rate fixed?
If the rate is variable, your repayments could go up or go down. If the rate is fixed, your repayments will stay the same.
• Are there any charges that are not included in the APR?
This could include charges for services such as optional payment protection insurance.

If so, make sure you understand:
o what the charges are;
o whether you really need the services offered;
o how much you would have to pay; and
o when you would have to pay.

• What are the conditions of the loan or credit and do they suit you?
For example, do you have a choice about how and where you make the repayments? If you suddenly have spare money, can you pay the loan off early - without penalties?

• Can you afford the monthly payments?
A more expensive loan (with a higher APR) could have lower monthly payments if they are spread out over a longer period of time. That might suit you better if your budget is tight, even though you would pay more in the long run.

Previous Article: Protecting your Credit Card from fraud

Protecting your cards from fraud

Unlike elsewhere in the world, any UK cardholder who is the innocent victim of fraud is not held financially liable and the most you will ever have to pay is £50.

However, the inconvenience of reporting an incident, being without your credit card and waiting for any fraudulent activity on your card to be reversed or offset can be very upsetting and frustrating.


Visit the websites for your credit card protection:
www.cardwatch.org.uk
www.banksafeonline.org.uk
www.identitytheft.org.uk


Protect yourself from being a victim of card fraud by:

• keeping your PIN safe
• never letting your card out of sight when making a transaction
• only shopping on secure websites and from a computer that has upto-date virus protection
• carefully discarding any receipts and statements by shredding them or tearing them up
• carefully checking your monthly statement
• reporting lost/stolen cards or any suspicion of fraudulent activity immediately to your credit card company
• shielding your PIN when using your card, both at a cash machine or at in a shop.

How the cardholder is protected? The legal side of protection

Using your credit card to make purchases gives you extra protection if things go wrong – protections you don’t get paying by debit card, charge card, cheque or cash.

When you spend between £100 and £30, 000 on a purchase with your credit card you benefit from Section 75 of the Consumer Credit Act (1974).

This law means that your credit card company is jointly responsible, along with the supplier of the goods or services, for any breach of contract or misrepresentation by the supplier. In practice this means that if a company fails to actually deliver the goods or services you’ve paid for – perhaps because they have gone out of business – you can get your money back from your credit card issuer.

Section 75 does not absolve the supplier who has let you down of their responsibility so in the first instance you should always try to get your money back from them first. Keep a copy of any correspondence as your card company will ask you for this.

Previous Article: Using a Credit Card

Using a credit card

Continuing further from our past article on Credit Card Jargon Buster, let’s today talk about some good tips on how to use your card wisely.

Whether you’ve just received a new credit card or have been using one for years it makes sense to check that you are using your card sensibly. This article has a few top tips to keep your finances healthy and give you peace of mind.

Please understand it clearly that Credit is not free money. If you want to borrow on your credit card check that it is the most effective way to pay for what you have in mind. A credit card can give your finances flexibility but is not the most sensible choice for long-term borrowing.

It’s common sense that if you can't afford to repay it then don't spend it.
When choosing your credit card you should have carefully considered what you want it for and so should be aware of its features and terms and conditions, and how you intend to manage your repayments.


Top 10 tips to get the most from your card

1. Spend only as much as you can afford

If you don’t intend to pay off your statement amount in full every month, and before you use your credit card anymore, ask yourself if you can afford the repayments. Do NOT use your credit card to buy goods you can't afford or don't need, or to fund a lifestyle that is beyond your means.

2. Set up a Direct Debit to pay at least the minimum payment each month

That way you can ensure you never incur any late payment fees. Talk to your card company to find out how to do this.

3. Don’t make the minimum repayment on a long-term basis

Unless you’re taking advantage of a special deal or zero per cent offer only ever making the minimum repayment will take you longer and cost you more to clear your debt. It’s NOT a recommended payment schedule.

4. Ensure payments reach your account on time

Payments can take more than three working days or more to reach your account. There will normally be information on your statement that tells you how long you should allow.

5. Check your monthly statement

Managing your money means knowing what you owe. How much interest are you paying? What repayments must you make? The answers are all on your monthly statement.

6. Keep your PIN safe

Don’t write down your PIN or lend your card and PIN to others. If you do you could be held liable for any fraud on your card.

7. Think about how many cards you really need

If you believe you have more cards or more credit than you can resist or reasonably manage, talk to your credit card company and ask them to reduce your limit. Alternatively, if you no longer want or need a card, cancel it with your credit card company and close the account.

8. Read all correspondence from your credit card company

Your card company will send you important information about changes in your terms and conditions, including increases in your credit limit, special offers including balance transfers, and, potentially, credit card cheques. Reading these updates will help you manage your credit card account responsibly.

9. Keep some savings for unforeseen circumstances

A sudden emergency or loss of employment may mean that you cannot afford to make your repayments. Having savings can help you through such times.

10. NEVER IGNORE DEBT PROBLEMS!
If you are unable to meet your monthly repayments and you are finding it difficult to pay off the outstanding balance on your credit card you should contact your credit card company immediately. The earlier you speak to your card company the easier it will be for them to help you with your situation and assist you to make a repayment plan.


Previous Article: Credit Card Jargon Buster

Credit Card Jargon buster

Continuing further from the previous article, Selecting a Credit Card, here are some key terms you will find in the Summary Box that appears in all cards’ marketing material or on your statement, with a simplified explanation of what they mean.

These terms are the most common terms that are frequently used for credit cards, and it is extremely important that you understand them.


APR (Annual Percentage Rate)
This is an overall measure of the total cost of borrowing on a credit card and won’t just include the interest rate but any compulsory fees as well. You can compare this between credit cards.


Monthly interest rates
This is the cost each month for borrowing on the card and may vary for different kinds of transaction such as purchases, cash advances, balance transfers and so forth.


Interest free period
Many credit cards have an initial interest free period – which means there is no charge for borrowing over a set time. Usually this only applies to purchases
and balance transfers.This part of the Summary Box will tell you exactly what
terms and conditions apply.


Allocation of payments
When you make a payment to your credit card account to clear your outstanding debts your card issuer may pay off different kinds of borrowing in a particular order (e.g. purchases before cash advances).


Minimum repayment
Every month that you have an outstanding balance you have to make a payment on your account – this tells you the minimum you must repay.


Fees
Any monthly or annual fees on your card are listed here. If your card does not have a fee, this box will say "none" or "not applicable". Any conditions will also be shown here.


Charges
This section lists charges you might incur in using your card such as cash advances or for using your card abroad.


Default charges
If you breach the terms of your agreement, such as by failing to pay the minimum repayment or going over your credit limit – your card company may charge you.


Link to Previous Article: Selecting a Credit Card,

Do you really need a Credit Card?

So its time now that you have started thinking about taking a credit card? The very first thing to ask yourself is whether it’s really the right sort of borrowing tool that you need or can you be better off without it.

So first things first: A credit card is a convenient short-term way to borrow money, often offering a period of interest free credit. But if you’re considering about borrowing money for more than a few months then you might want to consider a personal loan.

Remember that you have to pay back what you borrow. It is equally true with the credit cards as well. You cannot just use your credit card as per your wish and forget it. You have the obligation to repay that money back to the credit card company. If you repay that money within the specified time limit (usually the next due date), then you don’t have to pay any interest on that. However, if you delay the payment, then you will have to repay a lot more than what you borrowed. It will involve a very heavy interest, and also late fee and penalty. All these charges may be subject to taxes like service tax and others.

Think about what you need credit for: is it a luxury or a necessity? Credit is not free money: the golden rule is that if you can’t afford to make repayments on your debt then you should not be borrowing at all.

Used sensibly, credit cards offer many benefits, but used irresponsibly could pose a lot of risks:

Advantages and risks of using a credit card:

Advantages:
- Free, short-term credit as long as you always pay your balance in full by the due date shown on your credit card statement.
- A safe and convenient way to pay for goods and services, particularly over the Internet, by phone or by mail order, from businesses both in the UK and abroad.
- Protection against fraud — if you are the innocent victim of fraud you will not be expected to pay if a criminal uses your card.
- Incentives for using a card such as loyalty points and cash back, or payments to support a charity.
- A truly global currency, as credit cards are accepted in virtually every country around the world.
- Perhaps the most flexible and convenient way of borrowing money in the short term.

Risks:
- May lead to unplanned levels of debt.
- Incur heavy charges if you make late payments, miss them altogether or go over your credit limit.
- Damage your credit rating if you continually make late payments or miss them altogether.
- Cost you more and take you longer to pay off than the alternatives, particularly if you only ever make the minimum repayment.
- If you have more cards than you need it could make it difficult to manage your finances.

Credit record or credit history checks

Let's continue further on Credit History from our previous article Credit Record for taking a credit card.

As informed by APACS on their website, there are some FAQs or Frequenty Asked Questions that a person may have regarding his credit history with respect to the financial markets. His credit records tells about what he has been doing in the past, how reliable he is with respect to payment of his loans and how well is he suited for taking another credit card or mortgage or loan.

Here is a list of compiled common questions that anyone may have on Credit records while applying for credit cards.

Q Why do lenders undertake credit checks?
A When you apply for credit, for instance on a credit card, the card company will want to make sure you are capable of repaying any money you borrow and will only lend to you if they feel it is responsible to do so.

Q What is my credit score/rating?
A Your credit score or rating will be calculated by your lender to assess your credit worthiness. The higher your score the better. Different lenders and credit reference agencies may use different criteria so your credit rating may vary. This is why you may be rejected for credit by one lender and accepted by another.

Q What is a credit blacklist?
A There is no such thing as a blacklist. Your credit record only contains factual information. If you have been refused credit you should contact the lender concerned to find out why. Different lenders may make decisions based on different criteria and assessments of your credit record.

Q Can anyone search my credit report?
A No. Searches can only be made with your permission. This is given by completing a consent clause on your application form or verbally if you are applying for credit over the phone.

Q Who has access to information on my credit report?
A Only organisations who provide information to the credit reference agencies are entitled to look at the information held about you. They can only do this if you have given your permission.

Q How can I find out why my application for credit was turned down?
A Contact your lender. They will tell you whether this is because of your credit record or for some other reason.

Q How safe is my information?
A The credit reference agencies comply with the Data Protection Act 1998. They are also monitored by the Information Commissioner’s Office.

Q What information is stored about me and where it is stored?
A Most people have some type of credit agreement on a credit card, loan, mortgage or mobile phone account. Every lender stores information on credit agreements with one or more of the UK’s three credit reference agencies.
Every time you apply for new credit this information is used by the new lender to check your credit history or rating; to see how much you already owe and how well you’ve managed any previous credit. A lender can look at how many other applications for credit you have made recently and review publicly available
information held by the credit reference agencies. This includes whether you are registered on the electoral roll, if you have any court judgements against you or have been registered bankrupt.

Specifically a prospective credit card issuer will be able to see what outstanding loans, mortgages and credit card products you have. They will be able to see what cards you have, what the credit limit is on those cards and what the current outstanding balance is, as well as whether regular repayments are being made on that card.
If you apply for a card with someone you already have a financial relationship with (e.g. mortgage, current account), they will have access to additional information about your financial behaviour.

Credit Record for taking a credit card

It is very very important to have a good credit records, whether you are applying for a loan or a credit card. The credit card companies and loan or mortgage lenders check your credit history before considering your application for loans, mortgage or credit cards. Hence, ensure that you always maintain a good credit history and record.

Understanding your credit record

Your credit record is the information a lender will look at when deciding whether to lend you money. About a third of all applications for credit cards are turned down, so it makes good sense to understand what information is used to make lending decisions; what you can do to protect it; and how you can ensure that the information held about you is correct.

This article answers some of the key questions you might have as well as explaining why it is so important to complete application forms for credit with care and who you can contact if you have any difficulties.

How to keep your credit record healthy:
Important Tips

· Always try and make your payments on time but if you think you are unable to do this, contact your lender as soon as possible. They will help you choose the best option available to you.

· Make sure you check your credit report with each of the three credit reference agencies at least annually and that the information is correct. If it isn’t, contact the credit reference agency concerned and ask for it to be corrected.

· Make sure that you are on the electoral roll.

· If you have paid a court judgement, make sure it is shown as settled on your report.

· If a bankruptcy order has ended or been withdrawn, make sure that this is shown on your report.

· Try not to make multiple applications for credit in a short period. A high number of checks by different lenders may lead to some lenders refusing you credit.

· Always complete applications for credit, accurately and honestly.

Problems with Chip and Pin

Problems with Chip and Pin

Though Chip and Pin comes with benefits, but it still is not foolproof and also creates some problems for individual handling. The biggest problem with chip and pin is that you will have to key in your PIN no. at every transaction, be it buying a beer in the pub, shopping at Tesco, Sainsbury or Asda, or withdrawing money from any ATM or cash machine. Since you have to key in your pin every time, it means that you are prone to your pin being revealed to people standing nearby.

For e.g., shopping at stores like Tesco and Asda are very much susceptible to revealing of PIN. There is a long queue of customers behind you. While you key in your pin, it is possible that someone might see your finger movement.

Another problem is that stores usually have cameras installed at the payment counters. They can easily capture your finger movements while you key in your PIN. However, in countries like Netherlands, superstores like Albert Hein have a shielded cover to hide the PIN pad, hence it secures the PIN no. while entry. The same can be followed in UK as well.

The customer is responsible now:
One of the major setbacks of implementation of chip and pin is that the liability is now given to the customer. Imagine someone robs you of your card on a lonely street and beat you to ask your pin no. By the time you file complain, the robber may use your card to withdraw money, make an expense or shop around with your card. The banks issuing the card just finish off with their liability the time they give you your PIN No. It becomes the customers responsibility for all the transactions that have taken place, as he is the only one suppose to know about the PIN.
It also makes it hard for the customer to prove his innocence in case of fraud, as he is the only one suppose to be responsible for the PIN and the card.

Here are some stories of credit card frauds

Here are some stories of credit card frauds:
· Resellers liable for fraudulent transactions (BBC News)
· The story of how French smartcards were cracked back in 1999 (multiple sources)
· Hackers succeed in cracking Siemens digital card signature (The Register)
· Card Confusion (IT Week)
· The Dangers of Identity Fraud (Credit Card Magazine)
· Market Comment (Yahoo Business)

Especially for elderly people, it may sometime become inconvenient and embarrassing if they forget their PIN no. while paying for shopping at a retailer or at a restaurant. They are required to remember the PIN, while initially they were only required to sign on the paper receipt.

What is Chip and Pin on Credit cards

What is Chip and PIN?
According to a note from Abbey National Bank:
"Chip and PIN is a new, more secure card payment method that's gradually being introduced by banks and shops across the UK. When you use your card to buy something in a shop you key in your Personal Identification Number (PIN) instead of signing a receipt. This is the same PIN you use at a cash machine to take out cash.
Shops in your area may be using it already and it will be common at all major retailers by 2005."
"Chip and PIN is designed to reduce card fraud and the hassle it causes. Built-in microchip technology protects the data on your card from being copied or altered."

Banks and retailers are replacing traditional magnetic stripe equipment with that based around smartcards, which contain an embedded microchip and are authenticated automatically using a PIN. When a customer wishes to pay for goods using this system, the card is placed into a "PIN pad" terminal (often by the customer themselves) or a modified swipe-card reader, which accesses the chip on the card. Once the card has been verified as authentic, the customer enters a 4-digit PIN, which is checked against the PIN stored on the card; if the two match, the transaction will be automatically completed.

France has cut card fraud by more than 80% using a similar, but incompatible system. Chip and PIN is the name given to the initiative in the UK but countries worldwide are launching their own initiatives based on the EMV standard, which is a group effort between Europay, MasterCard and VISA. By the end of 2004, 100 countries will be using compatible systems based on this standard, and France aims to migrate its existing systems to be compatible with the new cards.

Note that "cardholder not present" transactions such as Internet, telephone or mail order purchases are not affected by the introduction of the Chip and PIN system. Since these are also major areas of fraud, other initiatives such as Verified by Visa and MasterCard SecureCode—both of which are implementations of Visa's 3-D Secure protocol—are being developed to improve security in these situations, such as additional security codes printed on the back of the card and more complex authentication services.

Benefits of Chip and Pin
Under the old system, a customer would have to hand over their card to the retail assistant or to the restaurant waiter for each payment. In certain environments such as restaurants, for example, this often meant that the card would be taken away from the customer to the card machine. This kind of card being taken out of sight gave rise to situations when the card was either duplicated or the card details being stolen. This is no longer the case with the introduction of Chip and PIN as wireless PIN pads have been introduced that can be brought to the customer's table.
Hence, Chip and Pin offer much more secure and easy mode of payment. However, it is also related with some problems. Let’s discuss the problems with chip and pin in the next article.

-Credit card frauds - Statistics

It has become increasingly important that you shield your credit card or debit card from the fraudsters and use it wisely and carefully. Remember that fraudsters are just looking for opportunities where they can trace out the details of your credit card or debit card, and misuse it. All you end up doing is getting into an unwanted situation of financial obligation that you have not met and getting into legal proceedings. As it is said, “Prevention is better than cure”, so lets be cautious while using our credit card or debit card either online, or in-country retailers and especially while using the cards abroad.

The successful introduction of chip and PIN in the UK has meant that fraudsters are increasingly being driven overseas to commit card fraud on UK cards in countries where chip and PIN has not yet been rolled out. For e.g. US is yet to introduce chip and pin service and is still preparing to fight up against credit card frauds.

Here are some facts and statistics about the Credit card frauds that have been committed on UK based credit and debit cards in last few years. We believe this will give you enough insight into how important it is for anyone to prevent credit card or debit card misuse and protect his cards.
The statistics presented are gathered from various official sources like FSA records and those available online.


In 2006, fraud committed abroad using UK-issued credit and debit cards totalled £118.2 million. Although up 43 per cent from 2005 (£82.8 million) the British public are spending more abroad with their cards than ever before and the losses are still smaller than they were in 2001 and 2002 (£138.4m and £130.2m respectively).

However, you don’t necessarily have to leave the country to be a victim of fraud abroad. You may as well end up revealing your credit card or debit card details to a fraudster while staying in your own country and the fraudster may end up using your card for an online purchase from a foreign country. Some intelligent fraudsters even use card copiers, which replicate your credit card or debit card and create an exact duplicate card resembling your card. They then use the replicated card for purchases and the bills to be paid become your liability.

A proportion of this fraud occurs when your card or card details are stolen in the UK and then used fraudulently overseas. In 2006 the countries where most fraud occurred on UK-issued cards were the US (£16.7 million), France (£7.5 million), Spain (£6.7 million), Italy (£6.4 million) and Thailand (£4.1 million). So you see, the card details can be taken to any country and can be used from anywhere. Losses in the US, which as yet has no plans to rollout chip and PIN, were up 49% year-on-year. However, losses in France and Spain, countries that are rolling out the secure technology, have decreased by 35% and 30% respectively.

Hence, Chip and PIN service seems to be quite effective in fighting card frauds. Countries like Netherlands, have forced chip n pin service compulsorily, so is being implemented in UK as well.

This article was to give you a rough idea of how much prone your credit card is to frauds and hence you should ensure that you keep it at a safe place and don’t reveal the details while shopping or making online purchases.