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Getting a credit card with no deposit can be easy if you have an established credit history with a good or excellent credit score. But if you’re just establishing your credit history or are trying to build your credit score, it can be much more challenging to apply for a credit card with no deposit.

For some, a secured credit card (one requiring a security deposit) might seem like the only option, but there are other paths to building your credit history. In this guide, we’ll cover how to find and apply for credit cards with no deposit — and what steps you can take to get closer to approval if you’re getting denied.

What Is a Credit Card Security Deposit?

Because of their established credit history and decent credit scores, many borrowers can open credit cards with no money down (or any other kind of collateral). This is called an unsecured credit card. However, if you don’t have any credit history or have a low credit score, you might find that credit card issuers will only offer you a secured credit card — meaning it requires a security deposit.

A credit card security deposit is refundable and often equal to the value of the credit limit on the card. Typically, the deposit amount ranges from $50 to $300.

While going this route can’t help you with unexpected expenses (as with a debit card, you are technically only able to spend money you already have), it can be a good way to build credit. However, you’ll want to ask the card issuer if they report to the credit bureaus, just to ensure they do.

Eventually, you may be able to graduate to an unsecured card if you consistently make on-time payments — one of the cardinal credit card rules.

Applying for a Credit Card With No Security Deposit

Applying for a secured credit card requiring a deposit might not be appealing to every potential borrower, especially because you need the money for the deposit upfront. These cards also typically have higher interest rates and fees. Fortunately, you have other options when shopping for a credit card.

Checking Your Approval for a Card

There’s no such thing as guaranteed credit card approval with no deposit. However, if you’re receiving emails or snail mail with credit card offers saying you’re preapproved, you might find success when you apply. You’ll still have to go through the formal application process and could ultimately get rejected, but getting a preapproved offer is a good start towards getting a credit card.

You can also proactively check your approval for a credit card online. Take a look at your credit score and then search online for offers for credit cards with no deposit that include your credit score in their target range.

Becoming an Authorized User

If you aren’t having success getting approved for a credit card on your own, ask a parent, family member, or trusted friend about being an authorized user on their credit card. As an authorized user, you’ll receive a credit card with your name on it and can use it like a traditional credit card, but you will not be the primary account holder.

The primary account holder is the one responsible for making on-time payments and monitoring credit usage. As an authorized user, you won’t have control over things like credit limit, and the primary cardholder can even set spending limits on your card.

However, if the primary cardholder uses the credit card responsibly — making regular, on-time payments and keeping credit utilization low — you will likely see a positive impact on your own credit score. Eventually, your score might improve enough for you to try applying for your own card again.

If someone makes you an authorized user on their card, however, it’s important to pay them what you owe each month. Never rack up credit card charges beyond what you’ve discussed with the cardholder. If you abuse your card privileges, it will affect your credit score and the score of the account holder — and the friend or family member will be solely liable for paying off your debts.

Getting a Student Credit Card or a Subprime Card

If the thought of affecting someone else’s credit score as an authorized user makes you uncomfortable, you aren’t out of options. You might be eligible to apply for a student card or a subprime card.

•   Student credit card: Most student cards do not require a security deposit and are designed for students who have no credit history. Some cards might even offer cash back rewards and no annual fees. However, as the name implies, you must be able to prove you are a student as part of the application process.

•   Subprime credit card: A subprime card is an unsecured card (i.e., no-deposit card) designed for borrowers with bad credit (generally a score below 580 in the FICO® score model). While subprime credit cards provide a way for bad-credit borrowers to get a credit card with no deposit, they often come with their own drawbacks. Typically, subprime cards charge an application fee; some might have annual or even monthly fees. Credit limits tend to be low.

Transitioning to an Unsecured Card

If you have no luck with a student or subprime card and can’t become an authorized user, you may need to consider applying for a secured credit with a deposit after all. Although it might not be ideal, it can be a good first step toward building your credit history.

If you make regular on-time payments, the credit card issuer might eventually transition you to an unsecured card. Alternatively, you can be proactive: After building your credit history and score over several months with a secured credit card, you can apply for a credit card with no deposit through another issuer. You might find that you’re more successful this time around.

Recommended: When Are Credit Card Payments Due

What to Know About the Effects of Your Credit Score

An unsecured credit card can potentially affect your credit score if the credit card issuer reports to the credit bureaus. Before opening a credit card with a security deposit, ask the issuer if they report to the bureaus.

If they do, regular on-time payment could build your score over time. On the flipside, late or missed payments could adversely affect your score.

Getting a No-Deposit Credit Card: What You Should Know

So, should you get a no-deposit credit card? In general, these unsecured cards offer greater flexibility at the start because you aren’t required to pay a security deposit.

However, opening a credit card of any type is a big decision — and not one to be taken lightly. It’s important to consider the potential effects of opening a credit card and to be aware of how much a credit card costs. For example, if you max out a credit card with a high interest rate, you might find yourself drowning in the fast-growing debt it creates.

Before opening a no-deposit credit card (or any credit card), think about the implications it can have on your finances. You might consider alternate ways of establishing credit, like credit-builder loans or even small personal loans.

However, these options don’t offer some of the same perks and protections that a credit card does, such as credit card chargebacks. If a credit card feels like the right step for you, begin your research process online.

Recommended: What is a Charge Card

The Takeaway

Credit cards without a security deposit, called unsecured credit cards, can be appealing because there is no money down at the start of the loan. However, borrowers without a credit history or who are struggling with bad credit may find it challenging to get approved for a no-deposit credit card. If applying for a secured credit card (i.e., one with a security deposit) is not ideal for your financial situation, you can ask to become an authorized user on someone else’s card or apply for a student or subprime credit card.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Do all credit cards require a deposit?

Only secured credit cards require a security deposit. Those with no credit history or bad credit scores might only be eligible for secured credit cards. If you have a good credit score, you can apply for a credit card without a deposit.

Can I get a credit card if I have no credit history?

It is possible to get a credit card with no credit history. A secured credit card requires a security deposit but makes it easier for borrowers with no credit history to get approved. Students can also consider student credit cards, which are often issued to student borrowers without any credit history.

What credit score is required for approval?

While having a good to excellent credit score (typically 670+) is ideal for getting the best credit cards with the lowest rates, some credit card issuers do offer cards for borrowers with fair or even poor credit (meaning scores between 580 and 669). These cards might have higher fees and fewer perks and may require a security deposit.

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Photo credit: iStock/Prostock-Studio

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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If you’re unhappy with a recent purchase or believe an unauthorized charge occurred, you can dispute credit card charges by filing a claim with your card issuer.

Whether you willingly made the purchase or a criminal got a hold of your credit card details, you may still be protected under the law so that you don’t necessarily have to pay.

Read on for more details on instances on when you may and may not consider disputing a credit card charge, as well as instructions for how to do so.

Disputing Credit Card Charges

Disputing a credit card charge involves filing a claim with a credit card issuer that argues that the cardholder shouldn’t be responsible for paying for a specific purchase made with their credit card.

A cardholder can’t make a dispute if they simply don’t like the item or service they received. However, they can dispute a credit card charge if the merchant is acting maliciously, such as if they don’t deliver an item the consumer ordered or don’t properly reimburse a return. A cardholder also can dispute credit card charges when certain billing issues are made or if they believe there was a fraudulent charge.

The Fair Credit Billing Act (FCBA) gives consumers the right to dispute a charge and to request an investigation into the issue. Thanks to the FCBA, consumers are also entitled to a quick response from their credit card issuer and to have their credit score protected during the course of the dispute investigation, which is critical given how credit cards work.

Recommended: Charge Cards Advantages and Disadvantages

When To Dispute a Credit Card Charge

There are a few different times when disputing a credit card charge makes sense. Here are examples of when a person might consider a dispute.

Fraudulent Charges

You can dispute a credit card charge that was the result of theft, such as if you fell victim to a credit card skimmer or due to unauthorized use. Before you report a fraudulent charge, make sure it was not just another authorized user on the card who made the charge or that you didn’t let someone else use your card. Also keep in mind that merchants may use another name or address for billing.

If it does appear to be a fraudulent charge after review, report it immediately. By law, you can’t be held liable for more than $50 in fraudulent charges, and many credit card issuers have a $0 liability policy. This would mean you wouldn’t have to worry about the charge at all, let alone any interest that may have accrued based on the APR on a credit card.

Billing Errors

Billing errors can also occur and are a good reason to dispute a charge on your credit card.

For example, if the credit card issuer sends a bill to the wrong address, which interferes with the cardholder paying their bill on time, they can dispute any credit card interest or late fees that have accrued.

A credit card bill can also have numerical errors if the charges were incorrectly totaled. Any bill with the wrong date or amount included on it can also count as a billing error, such as if you pay taxes with a credit card but the total reflected in your statement is different than what you actually paid.

Bad or Unrendered Services

Even if someone agreed to pay for a purchase, it is possible to dispute a credit card charge for goods or services that were not delivered or that were unsatisfactory. This can include if someone doesn’t receive an item they purchased through a merchant that accepts credit card payments or if they didn’t receive a refund after making a return.

Per the FCBA, to take advantage of this protection, you must first make a good faith effort to resolve the issue with the merchant. Additionally, the purchase must be for more than $50, and it must be made either within your home state or within 100 miles of your billing address.e for more than $50, and it must be made either within your home state or within 100 miles of your billing address.

When You Should Not Dispute a Credit Card Charge

There will be times when making a dispute isn’t doable. To save time and stress in the future, here’s when disputing a credit card charge may not be the right step.

If a Friend or Relative Made a Purchase

For a credit charge to be considered “unauthorized use,” the purchase must be made by someone who doesn’t have a right to use the credit card.

Unauthorized use can happen if someone steals a credit card (whether the physical card or credit card information, like the CVV number on a credit card), or if they find one that doesn’t belong to them and then uses it.

On the other hand, if someone gives a friend or family member official permission to use their credit card, but they use it for a purchase the cardholder didn’t approve, this is still considered authorized use.

This is why it’s important to only authorize trusted users. If a friend or family member abuses their access to a credit card, the cardholder would need to contact their credit card company and remove them as an authorized user. In the meantime, the cardholder would remain responsible for any charges the individual made when they were an authorized user — even if they push them up to their credit card limit.

You Did Not Inform the Merchant Concerning the Issue First

If it’s a complaint regarding the quality of goods and services, you must first contact the merchant about the issue before making a dispute. Credit card companies may want to see proof that you’ve tried to work with the merchant before you turned to them, though this will vary by issuer.

Recommended: When Are Credit Card Payments Due

How to Dispute a Credit Card Charge

The process for how to dispute a credit card charge depends on the credit card issuer as well as the reason for the dispute. Just as issuers have their own process for how to apply for a credit card, they also have their own process for filing a dispute. That being said, here is the general process for each type of credit card dispute:

•   Billing error disputes: The billing error dispute process is regulated by the FCBA. To dispute a credit card charge related to a billing error, contact the credit card issuer’s billing inquiries department (and make sure to keep track of this; say, save a copy of the email). You should use the sample letter for disputing charges provided by the Federal Trade Commission (FTC) to do this. In your letter, detail the reason for the dispute and include any supporting documentation.

•   Fraudulent charge disputes: If a dispute is related to fraudulent charges, the cardholder can contact the credit card company. The company may request proof of a police report or other documentation that proves their credit card was either lost or stolen.

•   Bad service or unrendered services disputes: When it comes to service issues, it’s best to start with the merchant. If the merchant won’t refund the purchase, the cardholder can request a credit card chargeback online or in app, over the phone, or by mail. They should include any supporting documentation that backs up their claim and shows their attempts to work with the merchant directly first.

It’s important that you do not pay for the disputed charge while the issue is still being resolved, though you’ll still want to make the credit card minimum payment to avoid late fees or other penalties.

Generally, consumers have 60 days to file a request to dispute a credit card charge. After filing a dispute with the credit card issuer, the issuer has 30 days to send a letter acknowledging the dispute, and they must settle the issue within 90 days of receiving the letter.

The Takeaway

If a consumer believes that a billing error occurred, their card was used fraudulently, or they received bad service or unrendered services, then they have a right to dispute the charge with their credit card issuer. Not all issues can be resolved with a dispute. However, it’s worth confirming what options the credit card issuer has for moving forward when you’re unhappy with a charge.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How long do you have to dispute credit card charges?

In the case of a billing error or unsatisfactory charges, you must make a dispute within 60 days of receiving your statement. There are no limits on how soon you must dispute a charge related to fraud.

What happens if you dispute a charge on your credit card?

There’s no guarantees that a dispute will work out in the cardholder’s favor. The credit card issuer must resolve the investigation surrounding the dispute within 90 days of receiving it.

Does a dispute affect credit score?

Filing a dispute doesn’t necessarily impact a credit score. However, if the dispute is surrounding an inaccurate late payment or other negative event, having the issue resolved after a dispute can help build the account holder’s credit score.

What happens if a credit card dispute is denied?

The credit card issuer can choose to approve or deny a dispute. If the filer disagrees with the result of their investigation, they can appeal the decision by writing to the creditor within 10 days of receiving the explanation for why the dispute was denied.

Can you dispute a charge after 90 days?

Generally, consumers only have 60 days to dispute a credit card charge after receiving their bill. The only exception to this timeline is fraud, which has an unlimited window for reporting. That being said, if someone realizes a charge is inaccurate after 60 days, it’s worth consulting their credit card issuer about their options.

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Photo credit: iStock/Just_Super

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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You may already know that credit cards offer an easy and convenient way to make purchases, but that’s just one of many potential credit card benefits. From rewards offerings like cash back, travel points, and one-time bonuses, to financial benefits like payment security, the opportunity to build credit, and a grace period, there are a number of reasons to keep a credit card in your wallet.

Read on to learn 10 advantages of using a credit card, as well as some tips to ensure you use your card responsibly.

1. Cash Back

Many credit cards allow you to earn cash back on everyday purchases, such as gas or groceries, a reward introduced long ago in the history of credit cards. Essentially, with cash back, you get a small amount back in cash that’s a percentage of how much you spent.

With cash-back cards, you can usually put any cash you receive towards your credit card balance, or you can opt to receive the money through a direct deposit to your bank account, as a check or gift card, or put it towards other purchases.

Recommended: Tips for Using a Credit Card Responsibly

2. One-Time Bonuses

Credit cards sometimes will offer a one-time, introductory bonus that allows you to earn enhanced rewards as long as you spend a certain amount on your card within the first months your account is open. For instance, you might be able to earn a bonus of 75,000 reward points if you spend $4,000 within the first three months of opening your card. These rewards can be a great way to get something extra out of opening a new credit card.

3. Reward Points

Reward points are similar to cash-back rewards in that they offer an incentive for you to use your card. You’ll earn points for every dollar you spend on your card, such as one cent for every dollar spent. You can then redeem those points to put towards travel, gift cards, merchandise, charitable donations, or statement credits.

4. Safety

Another one of the many perks of how credit cards work is the built-in security and safety features they offer. Many major credit card issuers offer a zero-liability policy for fraud, meaning you won’t be responsible if any fraudulent purchases are charged to your account. Other credit card safety features include encryption and chip-and-pin technology, which keeps your account information safe when using your card for in-store transactions. Plus, many credit cards offer fraud and credit monitoring services to allow you to easily keep tabs on your account.

Compared to debit cards, credit card security tends to be much more robust and the protections against fraud are more consumer-friendly.

Recommended: What is a Charge Card

5. Grace Period

This usually isn’t the first advantage of a credit card that comes to mind, but it’s a major one and a key part of what a credit card is. A credit card’s grace period between when your billing period ends and when your payment is due. During this grace period, no interest accrues. So if you are able to pay your balance in full during the grace period, you won’t owe any interest.

6. Insurance

Many credit cards come with insurance. For instance, travel credit cards might come with travel insurance, trip cancellation insurance, trip delay insurance, or rental car collision insurance. Cards may also offer price protection, extended warranties, purchase protection, or phone protection.

7. Universal Acceptance

Credit cards are pretty much accepted anywhere, and you can use one whether you’re paying a bill via snail mail or making a purchase in store, online, or over the phone. A credit card can be used to pay for most things, including paying taxes with a credit card.

Breaking it down by credit card network, Visa and Mastercard are accepted in over 200 countries, as are Discover cards; American Express cards are accepted in over 190 countries. This comes in handy when you’re traveling and don’t want to fret about converting your U.S. dollars into foreign currency.

If you’re running a business, accepting credit card payments can help prevent fraudulent activity, such as someone trying to pay with counterfeit bills. It can also make it easier to keep track of transactions and purchases related to your business.

8. Building Credit

Another major perk of using a credit card is that it can help you build credit. Credit card issuers report your activity to the three main credit card bureaus — Transunion®, Equifax®, and Experian® — which is then used to calculate your credit score.

If you maintain a continuous streak of on-time payments, it will help with your payment history, which makes up 35% of your credit score. Plus, the longer you keep a credit card open, the more it helps with your length of credit, which is 15% of your score. A credit card can also help you build credit because it helps with your credit mix, which makes up 10% of your score.

9. Increased Purchasing Power

Having a credit card can increase your purchasing power, as you’ll have access to a line of credit that can make it easier to buy big-ticket items. For instance, if you’re down to $1,000 in the bank, you won’t be able to purchase that new $2,000 laptop. But if you have a credit line of $3,000 (and know you have a paycheck en route), you can purchase that laptop you’ve been wanting when it’s on sale and then pay it off when the funds hit your bank account.

Take this credit card advantage with a grain of salt, though — using your credit card to cover more than you can immediately afford to pay off can lead you to get into credit card debt.

10. Keeping Vendors Honest

Unscrupulous behavior from vendors does happen, unfortunately. If you pay a vendor through another means, such as cash, Venmo, or by writing a check, the vendor will have an easier time getting away with not providing the goods or services they promised.

But if you pay a vendor using a credit card, the credit card issuer has an incentive to get to the bottom of the issue and prevent fraud. And if you dispute a credit card charge, the issuer will withhold funds from the vendor. In turn, the transaction won’t go through, and you may be able to get your money back.

What to Look for in a Credit Card

Before applying for a credit card, do some comparison shopping first. Think about what kind of credit card you might need. Depending on your needs, preferences, and lifestyle, a travel credit card or cash-back card might be the best fit for you. Or, if you’re after a card with a low APR and minimal fees, a solid everyday card might be a better fit. If you’re working to rebuild your credit, you might consider a secured card.

Besides any credit card perks, look at the card’s interest rate. Your annual percentage rate (APR) will vary depending on your creditworthiness and the type of card you’re applying for (top rewards cards tend to have higher APRs than more basic cards). In general, however, a good APR for a credit card is one that’s below the current average credit card interest rate, which is 22.8%, according to the Federal Reserve.

Additionally, it’s important to check whether a card has an annual fee. If it does, look at its perks and how much you anticipate putting on the card in a given year to see if that fee is worth it. Also take into consideration any other fees a credit card may charge, such as late payment fees, foreign transaction fees, and balance transfer fees. You may want to avoid as many credit card fees as possible.

Using a Credit Card Responsibly

To use a credit card responsibly, it’s crucial to make on-time payments of at least the minimum payment due each billing cycle. This ties in with not spending more than you can afford to pay back, or running up a high balance on multiple cards, both of which could lead you into credit card debt.

Another rule of thumb to use your credit card responsibly is to keep your credit utilization ratio — the total amount you owe divided by your total available credit — under 30%. The average credit card limit in the U.S. is currently just under $30,000. So, to maintain a 30% credit utilization ratio, you’d need to keep your balances below $10,000.

When Not to Use a Credit Card

If you’re spending more than you can afford to pay back (or pay back within a reasonable amount of time), then it’s best to avoid using a credit card. The advantages of a credit card aren’t worth it if using credit cards is causing you to get into debt.

You’ll rack up interest charges on any remaining balances each month, and those costs can start to add up fast. While there are options like credit card debt forgiveness, they aren’t necessarily easy to get, and you can damage your credit score in the process.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

The Takeaway

As you can see, there are a number of potential advantages of credit cards, from rewards to payment security to an interest-free grace period. Enjoying credit card benefits requires using your credit card responsibly though. If you’re racking up more charges than you can afford to pay back, the interest and other implications could quickly outweigh the credit card advantages.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How secure are credit cards?

Credit cards come with many security features, such as pin-and-chip technology, fraud and credit monitoring, and zero-liability fraud protection. Plus, there are usually features like two-factor authentication or biometrics at login, and you can temporarily freeze your credit card if you suspect fraudulent activity.

How can I protect myself from credit card fraud?

You can protect yourself from credit card fraud by reviewing your credit card statement regularly, storing your cards safely, keeping your passwords protected, and being vigilant when using your credit card. You can also set security alerts for transactions over a certain dollar amount or for in-person, online, or phone purchases. If you suspect fraudulent activity, block your card, and report the suspicious activity immediately.

Do credit cards allow you to save more?

Credit cards usually enable you to spend more. However, if used smartly and responsibly, they can help you save through credit card rewards and other advantages, such as insurance and discounts. However, you’ll want to stay on top of payments and ideally pay your balance in full. Otherwise, the interest charges might outweigh any perks.

Should I use a credit card if I have a poor credit score?

If you have a poor credit score, it could be a good idea to use a credit card to build your score — as long as you can use it responsibly and manage on-time payments. Keep in mind that those with poor scores likely won’t get approved for the cards with the most competitive rewards, and they may face a higher APR and fees.

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Photo credit: iStock/Suphansa Subruayying

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Protecting yourself against credit card hackers — criminals that engage in credit card fraud and identity theft — is a vital part of using your credit card responsibly. Understanding how credit card hacking works and the many ways thieves can gain access to your personal financial information can help you protect both your physical credit card and your digital credit card account information.

Read on to learn how to protect your credit card from hackers, as well as what to do if your credit card is hacked.

What It Means for a Credit Card To Be Hacked

A credit card hack occurs anytime your credit card or credit card account number falls into the wrong hands. That information is then used fraudulently to make purchases and/or to engage in identity theft.

Credit card theft can entail everything from stealing your wallet to hacking into large databases holding hundreds of thousands of credit card numbers.

Ways Credit Cards Can Be Hacked

Thieves use a variety of ways to get their hands on your credit card information. The biggest money scams in the U.S. are now done digitally through email, text messages, or fake websites. But there are still plenty of old-fashioned scammers who use snail mail, phone calls, and in-person ruses.

Here are some of the most common forms of both types of fraud:

•   Lost or stolen wallet containing credit cards. An old but still common trick for credit card thieves is to steal the physical card, then use it and the information it contains to make fraudulent purchases. In addition, if other personal information is included in your stolen wallet, such as your address and even your Social Security number, thieves can use your identifying information to set up other fraudulent credit accounts.

•   Phishing. Another common credit card hacking method is for a thief to attempt to get ahold of your credit card information through a phone call, text message, or email in which they impersonate a legitimate institution. For instance, a phishing email that appears as if it’s from your banking institution may entice you to click a link that takes you to a page where you’re then asked to enter your account information.

•   Dumpster diving. Criminals search through trash to find discarded statements, receipts, and other documents that contain your credit card number and identifying information such as your name and address. They then use that information to make fraudulent purchases or engage in identity theft.

•   Data breaches. Professional hackers can break into large retail, bank, financial, healthcare, social media, and other websites and steal reams of personal information that often include credit card and other personal financial information from thousands of users. The usual aim is to resell that data on the dark web. From there, criminal buyers use the data to commit credit card fraud and identity theft. If your data is on file at a breached site, you’re at risk.

•   Credit card skimmers. Thieves also can use gadgets that can extract your credit card information when you swipe it to pay or to withdraw money from an ATM. These most commonly are found at gas stations or on outside ATMs, though they’re becoming less common with the introduction of chip technology.

•   Inside jobs. Unscrupulous wait staff, store clerks, health-care billing workers, and others with access to credit card data may take a photo or otherwise copy your card information and use it to make fraudulent purchases. On a larger scale, sometimes these workers are part of a criminal ring that helps access financial data from thousands of individuals that’s then sold on the dark web.

•   Public Wi-Fi networks. Your credit card also may be vulnerable to a credit card hack if you use a public internet connection, which is why it’s important to follow cybersecurity tips. If someone is monitoring the network and you enter any sensitive information, such as your account information, a thief may be able to swipe it.

Protecting Your Physical Card

Although digital credit card theft is more common than ever, plenty of old-fashioned thieves are still out there and would like to get their hands on your physical card. So, it makes sense to stay diligent. Taking these steps can help:

•   Don’t reveal your physical card. Avoid giving your physical card to anyone, and never post photos on social media with your credit card showing.

•   Black out the security code on the back of your card. Instead, you can file it in your password manager or another safe place. If your card is stolen, it’s harder for thieves to use the account information for online purchases if they don’t have your security code.

•   Don’t sign your card. You can limit fraudulent in-person purchases if your stolen card is unsigned. You can write “See ID” in the blank area, then show your ID to store clerks in lieu of a signature. When a thief is asked for ID, they won’t be able to provide it, potentially preventing the transaction from going through.

•   Use a protective sleeve or wallet. These RFID-blocking layers can prevent your card from being read by a technical device.

•   Report lost or stolen cards immediately. If your card is compromised, make sure to alert your credit card issuer immediately. They will then close your card and issue a new one immediately. This is also a good idea if you’re notified that you’ve been part of a data breach.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Protecting Your Credit Card Account Information

In addition to your physical card, you need to protect your credit card data as well. Big credit card data hacks can mean your personal financial details and credit card account information are vulnerable. But there are steps you can take to protect yourself:

•   Only use reputable shopping sites. Often, fraudulent sites are set up as a ruse to collect credit card information. When you shop online, always buy from trusted merchants.

•   Avoid using your credit card when you’re on public WiFi. It can be easy for criminals to pick up your data when you’re using public internet networks. As such, you’ll want to avoid entering any personal or sensitive information while you’re using these networks, even if you’re on your own personal device.

•   Check your account frequently. Don’t just wait for your statement to arrive in your email every month. Get in the habit of regularly monitoring your credit card activity online, especially if you find your credit card keeps getting hacked. If you find a suspicious charge, report it immediately.

•   Be wary of phishing scams. You may get an authentic-looking email, text, or phone call asking for your credit card information. This may be a completely cold call or a data thief looking to fill in information they may not have for you, such as your expiration date or CVV security code. Never give your information to anyone asking for it. Banks, credit card companies, retailers, and other reputable places only take your information if you contact them.

•   Use smart passwords. Use strong passwords that include lowercase and capital letters, numbers, and symbols. Change your passwords frequently and remember that if it’s easy for you to remember, it’s probably easy for a thief to figure out. Password manager software can help you generate and keep track of strong passwords.

•   Sign up for two-factor authentication. With two-factor authentication, a one-time code is texted or voiced to your phone when you log into a financial account. This helps to ensure the account holder is the one logging on. Other types of secure authentication, such as face ID, are used by some organizations.

Recommended: Tips for Using a Credit Card Responsibly

Steps to Take When Your Credit Card is Compromised

If you think you were a victim of credit card fraud and/or identity theft, it’s important to act fast. The Fair Credit Billing Act (FCBA) limits your financial responsibility for credit card fraud to up to $50, so you won’t be on the hook for more than that in the case of bogus credit card charges that have led you to request a credit card refund. Even better, many major credit card issuers offer zero-dollar liability protection.

But if the thieves go on to use your personal information to commit other types of financial fraud, you may be liable. Acting fast will also help minimize the onerous work involved in untangling identity theft.

Here’s what to do if what to do if your credit card is hacked, or you see suspicious charges on your statement or other signs of fraudulent activity:

Contact Your Credit Card Company

As soon as you spot anything, call your credit card company. Tell them you think your card and card information is vulnerable and request a new card with a new account number. Most credit card issuers will comply right away (unlike if you were falsely disputing a credit card charge). However, you may be without a credit card for a bit while you wait for the new one to arrive.

Sign Up for Fraud Alerts

If you’ve received a letter or other notification that your personal data may have been compromised, you can place a fraud alert at all three credit bureaus — Equifax®, Experian®, and TransUnion® — that may be monitoring your account. This stops unauthorized individuals from accessing your account information for a year, at which point you can request for it to be renewed.

Freeze Your Credit

A stronger step than setting up a fraud alert is to freeze your credit. When you ask for a freeze, the three top credit reporting agencies will make sure no one can ask for your credit report without your approval. The downside: A freeze can make it more cumbersome for you to legitimately apply for new credit.

File a Police Report

If you’re a victim of credit card fraud, you may need to file a police report. You may need that documentation as you move through different steps to report identity theft and other fraud as you try to recoup your losses. Your credit card issuer can help you determine if a police report is necessary. You can also report the fraud to the Federal Trade Commission on its website.

Recommended: When Are Credit Card Payments Due

Credit Card Security and Fraud Protection

There are a number of steps that credit card companies can take to increase credit card security and curb credit card hacks. For instance, some credit cards have two-factor authentication to protect access to your account.

Credit card companies can also offer the option to freeze your card immediately. You often can do so through their website or via their app if you notice suspicious charges or other activity.

And, as mentioned previously, some credit card issuers offer a zero-liability policy. As long as you report unauthorized or erroneous card transactions no later than, say, 60 days after the first statement on which the problem occurred, the card issuer won’t hold you liable for any fraudulent charges.

The Takeaway

Credit card hacks can be costly, onerous, and time-consuming. But you can take steps to avoid hacks by protecting both your physical card and your online credit card information.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How can I protect my credit card from being hacked?

You can fight credit card hacking by checking your account regularly for any suspicious charges, being mindful of phishing scams, shopping online with caution, and keeping your physical card and your digital card information safe. If anything were to happen, make sure to report any suspicious activity as soon as possible and to use credit freezes and fraud alerts when necessary.

Can a hacker steal my credit card information?

Yes. Credit card hacks include stealing your physical card or credit card information and making fraudulent purchases directly with your account. Or thieves may use your stolen personal information to set up a new fraudulent account in your name. Credit card hacks also happen when thieves steal financial information from databases at large retailers, financial institutions, and other businesses.

Can hackers use a credit card without a CVV?

Yes, although it can be more difficult for hackers to use a credit card without a CVV. The CVV number is often requested in transactions that don’t occur in-person as an additional layer of security to ensure that the person actually has the physical card.

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Photo credit: iStock/Talaj

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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