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so aren't credit cards great the rewards programs are fantastic you can buy
things now and pay for them later and the reasonable interest rates mean that
i'm just kidding about that last one but obviously there's a huge difference
between you using your own credit card irresponsibly and someone else deciding
to commit credit card fraud and run up a bunch of charges on your account and
these days is often much easier for criminals to forget about stealing hard
currency like the highwaymen of yesteryear and instead focus on ripping
off credit card numbers so they can charge as much as they want
well up to the victim's credit limit anyway but that leads us into another
big advantage that credit cards have over cash if your card number gets
stolen your credit card company has technological measures in place to
detect and put a stop to fraud but how in the world do they do this well
perhaps unsurprisingly major payment processors mine huge amounts of data
from their card holders and they know a great deal about their spending habits
and while that might sound a little creepy in this age where it feels like every smartphone and computer is trying
to learn about us it's also a key way that
companies like visa and mastercard detect fraud you see odds are that you
mostly swipe and tap your card in and around the areas where you live work or
frequently visit now as you do this your credit card company builds a picture not
only of where you spend your money but how much and how frequently so over time
they get an idea of whether you're a high roller with money to burn or if you
follow grandma's advice and only use plastic in emergencies so if a
transaction goes through for far more money than you usually spend
or from some far away locale this will automatically trigger the car company's
payment processing system to flag that transaction and mark it as potentially
fraudulent as the odds are that it wasn't you making the purchase however
if you've ever done something unusual like drive down to t01 in one weekend
for some dental work you might have had your credit card work just fine well it
turns out that your credit card carriers computers look for patterns that
wouldn't be obvious to us mere mortal humans now oftentimes thieves will use
stolen credit card numbers to buy something small at first to test the
card before moving on to grand theft so a stick of gum followed by a brand new
kitchen is going to raise some eyebrows in american express and some more
advanced methods can track the ip addresses of where transactions
originated from so if they see a charge tied to an ip address that's been used
in the past for fraud you might get a fraud alert on your phone or pc so that
you can contact your card issuer and tell them whether you've been scammed
and many banks employ similar technologies to protect money that you
already have in your bank account in fact if someone drinks a ton of money
out of your account fraudulently the bank generally has to give you that
money back as long as you report it quickly enough and since banks don't
want to have to foot the bill for theft they definitely have an interest in
keeping your cash as safe as possible
but remember that these systems aren't perfect in fact it's their errors that
allow them to continue to improve so keep an eye on your statements and
sometimes they can even work too well if you've gone on vacation to some exotic
place and started using your card without telling the company first it may
have ended up accidentally flagging your card when you tried to use it to buy a
mai tai or some bar in the caribbean so it's generally considered a good idea to
give them a ring before heading out on a big trip now of course with huge credit
card companies and banks using machine learning and artificial neural networks
to more effectively identify fraud patterns and develop new algorithms for
catching it there's a lot of secret sauce that goes into protecting
consumers that's kept away from the general public to keep it out of the
hands of would-be fraudsters after all i don't think kevin mcallister left the
plans for his booby traps in plain sight for the wet bandits to find
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