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It’s never a good feeling to look at your credit card statement and wonder, “What is this charge on my credit card?” When it comes to fraudulent credit card charges, your bank has often got your back. They have methods for spotting activity that isn’t normal, and they’ll usually alert you when a charge seems suspicious.

That said, your bank might not catch everything, and there may be a charge that’s valid but the amount is incorrect. So it’s important that you, too, keep an eye on your credit card statement to catch these errors and report anything that’s amiss immediately.

Here’s what to watch out for and tips for handling a dispute.

What Are Fraudulent Credit Card Charges?

Credit card fraud can happen if someone steals your card or the information on your card, or hacks into your account. Someone could do so by stealing your physical card, skimming your card information at a credit card terminal, through phishing scams via text or email, or by stealing your mail. Fraudsters then use the information they’ve stolen to make unauthorized purchases on your credit card.

Most cards offer zero liability on fraudulent charges, meaning you won’t be responsible for covering charges you didn’t authorize. This is an important feature of how credit cards work. However, it’s important that you catch fraudulent charges early so you can report them quickly and minimize your liability.

Recommended: Tips for Using a Credit Card Responsibly

Detecting Unauthorized Credit Card Charges Early

The key to spotting unauthorized charges on your credit card is remaining vigilant and always checking your credit card statement each month. When you receive your statement, follow these steps:

•   Review statements immediately. Avoid letting a few months of credit card statements accumulate before checking them. Whether you look them over online or via hard copy, do so ASAP so you can catch errors and head off fraud as quickly as possible. Going through your statements regularly will also offer a clearer understanding of how credit card payments work.

•   Check every purchase. Fraudsters know that small unauthorized credit card charges are less likely to get flagged. Go down the list of purchases you’ve made on your card over the last month and make sure you recognize the merchant and can match the sale with an item or service you bought.

•   Keep receipts. Hang on to receipts from credit card purchases so you can match them up to the items in your statement. This can also help if you’re unsure of how to identify a credit card transaction.

Fraudulent Credit Card Charges vs Billing Errors

Fraudulent charges are a result of theft. However, sometimes you may be charged for something that was due to a billing error. For example, perhaps you were charged twice for an item, or you were charged for goods or services that you never received.

Other billing errors could include:

•   Unauthorized charges, for which federal law limits your liability to $50

•   Charges that list the wrong date or amount

•   Errors in math

•   Charges for goods or services that you didn’t accept or weren’t delivered as agreed

•   Failure to post payments or credits, such as after you’ve returned an item.

You can correct these errors using procedures laid out by the Fair Credit Billing Act (FCBA). If a charge is found to be made in error, your credit card company will carry out a credit card chargeback, reversing the charges.

Reporting Unauthorized Credit Card Charges

Procedures for reporting fraud and billing errors are slightly different.

If you suspect fraud, you’ll take the following steps:

•   Contact your card issuer immediately. Tell them you suspect that you’ve been a victim of fraud. Your issuer can then investigate the charge.

•   Ask for your accounts to be suspended or closed, and ask to be issued a new card. Change passwords and personal identification numbers (PINs) on your accounts.

•   File an identity theft report with the Federal Trade Commission (FTC). You can do so at Identitytheft.gov .

•   Contact the three credit reporting bureaus, Equifax^®, Experian^®, and TransUnion^®. Confirm your identity with them and check your credit reports for any other fraudulent activities. Consider having a fraud alert connected to your accounts.

If you’re disputing a billing error, first call your credit card company and alert them to the error. The credit card company will investigate. If they find there was an error, your account will be corrected, and you will not pay credit card purchase interest charges on the amount for which you were billed.

In addition, send your credit card company written notification of an error. Use FBCA procedures to dispute the credit card charges, including the following steps:

•   Contact the creditor at the address they provide for billing inquiries. This address may be different from the one to which you send payments. Include your name, address, and account number, as well as a description of the billing error you’ve spotted. You may be able to proceed online or by phone as well as through the mail. The FTC provides a sample letter that you can use as part of the process.

•   Include copies of receipts and other supporting documents.

•   Be sure to mail your letter within 60 days of the first bill you received that contained the error.

•   Send the letter by certified mail and ask for a receipt so you can be sure your creditor received it.

•   Keep a copy of the dispute letter.

How to Read Your Credit Card Statement

It’s important to get familiar with how to read your credit card statement. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) requires that each of your credit card statements includes certain pieces of information.

•   First, there should be a section that includes your account information. This is where you’ll find your name, account number, and the date of the billing cycle.

•   Next, the account summary is an overview of transaction information on your card. This section will include the payment due date, any payments or credits that have been applied to the account, any fees that have been charged to you, and the total amount of your account balance.

•   Following this summary is a detailed account of the purchases you’ve made over the billing period. Each line item will include the vendor name, the date the purchase was made, the category (such as “groceries”), and the amount that was charged to your card. Go through this section carefully as you look for fraudulent charges or charges in error. This is how to find who charged your credit card.

•   Your statement will include other sections that detail payment information, interest or credit card finance charges, rewards, and account fine print.

Credit Card Security and Fraud Protection

When you apply for a credit card, carefully look at the security measures the card issuer has in place. Credit cards, such as the credit card offered by SoFi, can have a variety of measures to keep your information safe and protected from fraud.

Fraud protection limits your responsibility and liability for fraudulent charges. Many banks offer $0 liability. The FCBA limits liability to $50 for card-present fraudulent charges, and $0 if the card is not present, such as for online charges made with stolen credit card information.

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

The Takeaway

Fraudulent charges or billing errors can be an unfortunate part of having a credit card. Your bank may catch them, but it’s also important to be proactive and keep an eye out for fraud and errors on your credit card statement. Bringing them to the attention of your credit card company will help you get the issue sorted faster and head off potential future fraud.

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 do I file a fraudulent charge claim with my credit card company?

If you spot a fraudulent charge on your credit card statement, call your card company immediately and ask them to investigate. They can guide you through the process of disputing the charge.

How do I find out where a charge came from?

You can see where a charge was made in the detailed purchase information provided on your credit card statement.

How do I look up a charge from my credit card statement?

If you’re unsure about a charge on your credit card statement, call your credit card company, which may be able to do a credit card charge lookup by the merchant.

Photo credit: iStock/Pekic

SOCC-Q224-1908497-V1

31 Flavors

In the heat of August, let’s think about ice cream — in particular, a place that offers 31 flavors. If you’re a two-scoop kind of customer, you might choose two different flavors for the same cone, knowing that the combination will be better than each by itself. Some flavors are classics that almost everyone likes, some are more unique — a more acquired taste, if you will. Some you may have liked as a kid, and others are more adult-friendly.

I could carry this analogy on and on. Investment portfolios can be thought of as a combination of different flavored assets, and now is one of the most important times to be thinking about how to mix them together to create a durable portfolio.

Last week I wrote about fresh highs on the major indices, and this week markets hit another set of fresh highs. The S&P 500 has now hit records 17 times this year, many of which have occurred in just the past couple months.

S&P 500 On a Roll

For investors broadly, that’s great news. Portfolios are rising and people are feeling much better than they were in April. As we know, the performance of the S&P 500 and Nasdaq is being driven by a small group of mega-cap stocks. As a result, we also know that many investors have a large amount of exposure to that group — some intentional, some as a function of how much it has risen over recent periods.

The Setup Right Now

Anytime there is concentration in a portfolio, diversification should be top of mind. But with markets at new highs seemingly every few days, that’s even more the case. High valuations present the risk of volatility when sentiment shifts even a little bit.

We’ve used the chart below many times because it’s one that seems to stay relevant no matter what the market trend looks like. It shows how much of the market’s return can be attributed to earnings growth (blue), and how much can be attributed to growth in valuations (pink). We call the growth in valuations multiple expansion, and it largely depends on how strong sentiment and momentum are over a period of time.

S&P 500 Year-to-Date Performance

The main takeaway is that the pink portion is much more sensitive to volatility and can experience big swings quickly. Let me be clear, I’m not saying a big swing is coming, but when the pink portion is positive and growing, it’s important to take note and keep protection in mind.

Seasonality is another reason to consider diversification right now. I don’t find seasonality a strong argument to buy or sell assets, but I do admit it’s a force that tends to repeat more often than not, and late August through September have historically been volatile periods for markets.

S&P 500 Seasonality

In short, concentration risk — when markets are led by a small group of names, sentiment risk — when returns are driven by multiple expansion, and the fact that we’re entering a typically weak time of the year, all suggest to us that now is as good a time as any to make sure there are other flavors in the portfolio.

How to Diversify

When I think about diversification, it’s not just about having different types of stocks in the portfolio, it’s about having different types of drivers in the portfolio. One way we like to look at what’s driving markets is with factors, which are different attributes of securities that influence how they perform in varying market conditions.

A good way to diversify the equity exposure in portfolios is to diversify the factor exposure. We know that in recent years, markets have been increasingly driven by the momentum and growth factors. Breaking it down further, we find that the sectors most exposed to momentum and growth are ones that are influenced by what we refer to as “big tech” and include Technology, Communications, and Consumer Discretionary.

Large-Cap Factor Scores

Not surprisingly, these are also the sectors considered among the most expensive in markets right now.

In order to diversify the drivers, we want to have some exposure to sectors that aren’t as sensitive to growth and momentum factors. These fall into the other buckets above: Cyclicals and Defensives.

But not all of these are created equal, so let’s whittle down the groups.

Given that markets are at all-time-highs and valuations on the S&P 500 are in the 93rd percentile, we also want to diversify the valuation risk (i.e. multiple expansion mentioned above.) This means avoiding other sectors that are trading at extreme valuations compared to their history and to the S&P 500 broadly.

Lastly, we have to take into account the current macro and geopolitical environment. Materials, for example, pose a lot of uncertainty risk right now due to tariffs and aren’t very attractive, in my opinion.

Of course, we can’t avoid all the risks, but the sectors that appear to offer diversification benefits without overly exposing investors to macro, political, or valuation risk are Health Care and Energy. Two others to consider are Financials and Real Estate. Both could benefit from falling rates for different reasons than Big Tech companies.

At the end of the day, our duty as investors is to give ourselves the opportunity for upside while keeping an eye on the major risks to our portfolios. In the current environment, although I remain optimistic and believe in this bull market, I also believe it’s very important to spread out your exposure and try some other flavors.

Want more insights from Liz? The Important Part: Investing With Liz Thomas, a podcast from SoFi, takes listeners through today’s top-of-mind themes in investing and breaks them down into digestible and actionable pieces.

SoFi can’t guarantee future financial performance, and past performance is no indication of future success. This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.

Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Liz Young Thomas is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Form ADV 2A is available at www.sofi.com/legal/adv.

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