Credit card fraud can strike anyone. Whether it’s a lost card, a data breach, or a scammer who gains access to your financial information, fraud is more common than most people realize. The good news? You can take simple, practical steps to protect yourself. This guide will show you how to spot the warning signs, understand how credit card fraud happens, and stay ahead of potential thieves.
We’ve broken it down into three easy steps to help you stay secure.
Credit card fraud happens when someone uses your credit card without your permission to make unauthorized purchases or commit other forms of theft. It’s a type of identity theft and can take many forms, including fake accounts, account takeover, and fraudulent transactions. Scammers can strike online, over the phone, or in person, and it can happen whether your card is present or not.
In fact, card-not-present fraud has become much more common, especially with the rise of online shopping and mobile payments. Criminals don’t need to steal your physical card; they only need your card number, expiration date, and security code to cause serious damage.
One of the best ways to protect yourself from fraud is by regularly monitoring your credit card accounts. Look closely at your charges, and don’t ignore small ones. Thieves often start with a small charge to see if the card works before making larger purchases.
Make a habit of checking your credit card statements every month. If anything looks off, report it to your credit card issuer right away. Don’t wait for a large transaction to show up; even a $1 charge from a strange source can be a red flag.
Also, be sure to open and read your monthly statements. Sometimes, people throw away unopened bills because they assume it’s just the usual charges. But that can cause you to miss early signs of fraudulent activity.
Most financial institutions let you set up email or text alerts for your credit card transactions. These alerts let you know right away if someone is using your card. You can choose to be alerted for purchases over a certain amount or for all transactions.
These alerts are a great way to detect suspicious activity early and report it quickly. The sooner you spot a problem, the easier it will be to stop further damage.
Sometimes, credit card fraud isn’t just about purchases. In more serious cases, scammers try to take over your account. They might change your login credentials, mailing address, or phone number to prevent you from getting alerts. This is called account takeover, and it’s especially dangerous because you might not even realize it’s happening until it’s too late.
Be suspicious of unexpected changes to your account or notifications that your contact info has been updated. If you didn’t authorize a change, call your card issuer immediately.
Your credit report includes all of your credit accounts and activity. Reviewing it can help you spot unauthorized accounts or other signs of fraud, like a new account you didn’t open. Look especially for credit card accounts you don’t recognize, as they could indicate application fraud.
By law, you’re entitled to a free credit report from each of the three major credit bureaus (Experian, TransUnion, and Equifax) once a year. Visit AnnualCreditReport.com to request your report.
We also recommend checking your credit reports more often if you suspect fraud or if your personal information has been exposed in a data breach.
Learn more from Credit.org: Disputing Fraudulent Information on Your Credit Reports
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Application fraud occurs when a scammer uses stolen personal information to apply for a new credit card in your name. They might use your Social Security number, date of birth, and address. You might not even know it’s happened until a debt collector starts calling about a card you never opened.
Watch for suspicious activity on your credit report, like new accounts or inquiries from lenders you’ve never contacted. If you see signs of application fraud, place a fraud alert with one of the credit bureaus and consider freezing your credit.
Here’s how to place a fraud alert or credit freeze with the FTC
Keeping your card information safe is essential in stopping credit card fraud before it happens. Thieves have more tools than ever to steal your data, so learning how to guard your credit card details can save you from major stress and financial loss.
Never give out your credit card number over the phone, by email, or through text—unless you’re absolutely sure who you’re talking to. Scammers often pretend to be banks, government agencies, or even charities to trick you into giving them your credit card information.
If someone calls asking for your card number, hang up and call the company’s official number yourself. Always take the time to verify who’s contacting you before sharing any financial data.
Online shopping is convenient, but it can expose you to card fraud if you’re not cautious. Here are a few steps to shop online more safely:
Online fraud, including card-not-present fraud, is one of the most common methods scammers use today. If you store card numbers online, always choose two-factor authentication and use strong, unique passwords.
Learn more: FBI Tips for staying safe online
Physical theft still happens, so carry your cards in a secure wallet or use card sleeves that block RFID scanning. This prevents “electronic pickpocketing” from scammers using handheld devices to read your card without touching it.
You can also use virtual card numbers from some banks for added protection. These temporary card numbers link to your account but can’t be reused if stolen. They’re especially helpful for online purchases or subscriptions.
Knowing how credit card fraud happens is the first step toward stopping it. Here are some common methods scammers use:
Each of these methods can lead to fraudulent transactions, stolen credentials, or worse. Education is your best defense.
Learn more about Avoiding Credit Card Fraud from Credit.org
We mentioned account takeover in Part 1, but it’s important enough to mention again. Scammers may try to log into your credit card accounts, reset your passwords, and lock you out. If they succeed, they can rack up debt or change your account info.
Protect your accounts by:
If you notice emails about password resets you didn’t request or changes to your account info, act quickly.
Debit cards can be riskier than credit cards when it comes to fraud. Unlike credit cards, which offer zero liability protection, money taken from your debit card is gone from your bank account immediately. Recovering those funds can take time, and you may be liable for some losses if you wait too long to report the issue.
If you must use a debit card, take these precautions:
If you think your debit card has been compromised, report it right away to your bank. Acting fast is key.
Whether you’re using a mobile wallet, browser autofill, or storing data for recurring purchases, be smart about how and where you save account numbers. A stolen device or hacked account could give criminals everything they need.
Use passcodes or biometric locks on your phone and computer, and avoid saving card details on public or shared devices. Consider using password managers to store sensitive information more securely.
Even with the best precautions, fraud can still happen. That’s why it’s essential to know how to detect problems early and take action fast. The sooner you spot fraudulent charges, the more likely you are to stop further damage, and the easier it is to recover your money.
Monitoring your credit accounts gives you a broader view than just watching your credit card transactions. Unfamiliar accounts, inquiries, or changes to your information can all signal a deeper problem.
You can use credit monitoring services to keep an eye on your credit profile. Some credit card issuers offer this for free. These tools track activity across all your credit card accounts and notify you of changes like new accounts or high balances.
Here are some red flags that might mean you’re dealing with account fraud:
If you notice any of these signs, don’t ignore them. Call your card issuer immediately and report the issue.
The three major credit bureaus—Equifax, TransUnion, and Experian—collect your credit data and compile your reports. If fraud is detected, you can place a fraud alert or a credit freeze to prevent further issues.
Both are free and can be set up with one bureau, which will notify the others on your behalf.
Learn more: How to place a fraud alert or freeze with Equifax
If your card has been compromised, here’s what to do:
Federal law protects you against unauthorized charges, but timing matters. According to the Fair Credit Billing Act, you’re only liable for up to $50 if you report the fraud promptly. Most major card issuers go further and offer zero liability protection.
Some scammers test a stolen card by making small purchases. If they go unnoticed, they might follow up with larger ones. That’s why it’s important to catch and report even minor charges that seem suspicious.
Enable transaction alerts and check your balance frequently so you don’t miss anything. Keep in mind that it’s easier to catch fraudulent activity early if you stay engaged with your account on a regular basis.
If you find out that someone has opened a new account in your name, or you discover application fraud, you must act fast. Contact the lender and ask them to close the fraudulent account. Then alert the credit bureaus and submit an identity theft report with the FTC.
You may also want to file a police report, especially if the fraud involves large amounts or you’re asked to provide documentation to lenders.
You can’t always prevent credit card fraud, but you can make yourself a harder target:
Education is key. Once you know the warning signs and take simple steps to protect yourself, you’re far less likely to become a victim.
While online scams get most of the attention, physical theft is still a real threat when it comes to credit card fraud. A lost or stolen card can be used quickly, especially if you don’t notice it’s missing right away.
To reduce your risk, follow these safety tips:
Thieves may use skimming devices to steal your card present information at gas stations or ATMs. Check for signs of tampering like loose card slots or unusual attachments.
If your card is missing, treat it as if it’s been stolen. Call your credit card issuer immediately to report it. Most issuers will cancel the card and send you a replacement with a new number.
Thanks to zero liability protection, you likely won’t be responsible for unauthorized purchases, but quick reporting is key.
Also, keep an eye on your account numbers going forward. If you receive a new card, update your information with any auto-pay accounts you use, but avoid saving the number online if you can help it.
U.S. federal law provides strong protections for consumers facing credit card fraud:
If a scammer gains access to one of your online accounts, they might be able to extract payment information or open new lines of credit. Make it harder for them by following these tips:
Hackers can use your financial information to commit a range of crimes, from application fraud to account takeover. Take a few minutes every month to review your privacy settings and linked devices.
Though most people think of credit cards when it comes to fraud, debit card users are also at risk. In fact, the consequences can be worse if your checking account is drained.
Be just as cautious with your debit card as you would with a credit card. Avoid using it for online shopping or at unfamiliar merchants, and monitor your financial accounts often.
Also, some scams target people by opening fake accounts or using stolen credentials to apply for new cards. If you suspect this is happening, freeze your credit and file a report right away.
There’s no single way to stop card fraud, but by combining smart habits, regular monitoring, and strong security practices, you can lower your risk dramatically.
Here’s a quick recap:
The more proactive you are, the more protected you’ll be. Whether you’re managing one account or many, credit safety begins with awareness.
If you think you might have been affected by credit card fraud or want help spotting signs of ID theft on your credit reports, contact us and ask for a Credit Report Review.
