How to Make Sure it is Safe to Use Your Credit Card Online

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This is a guest article from an Australian personal finance writer Fred Schebesta

Craig Here: I almost edited some of Fred’s spelling into American spelling, but alas I embraced the Canadian in me and left some good old fashion spelling in the post.

Credit card holders fall into two distinct groups – those who use their cards for everything online, in person and over the phone, and those who treat their credit card like a bomb waiting to explode and only use it when absolutely necessary in case someone steals their identity. Fortunately, there are ways you can feel secure using your credit card, especially online where most people harbour some level of concern for their personal details, and rightly so.

Identity theft and credit card fraud are real concerns for anyone with a credit card and anyone shopping with their credit card online. However, just because there are people out there trying to steal your credit card details, it doesn’t mean you need to avoid online credit card payments, you just have to be smarter than the fraudsters:

5 Simple Tips for Credit Card Safety

1. Look for a Secure Socket Layer

Also known as SSL, the SSL protocol of a website uses a level of encryption to scramble the communication between your computer and the person you are making a payment to. This means that anyone who tries to intercept the communication will be unable to read it because it has been translated into a type of secret code.

You can check whether the website you are making a payment to is encrypted with SSL to protect your credit card details. Firstly look at the URL in the address bar at the top of your internet screen; a secure website will begin with https:// where as an unsecure site will only have http://. Each internet browser will also have its own way of telling you the site is secure too. For example, Netscape version 4.0 and higher will show a locked padlock in the bottom left corner of the screen, while Microsoft Internet Explorer will show a lock on the status bar when SSL is active on a webpage.

2. Pay through PayPal

PayPal allows you to send money and make payments online, using your credit card, without the recipient ever knowing your bank account details or credit card number. You can send payments to anyone with an email address or mobile phone number, and PayPal not only guarantees to keep your financial details private, but also offers you 100% protection against unauthorised payments made from your account.

3. Never email your credit card details

Firstly, a merchant who requests that you email your credit card number should make you instantly suspicious as they can easily set up an online payment system through their website, or a secure PayPal account. Secondly, there are very sophisticated programs which scan emails for credit card numbers. These programs can even detect partial credit card numbers sent in different emails so there is no safe way to email your credit card details. Instead, simply call or fax the details through.

Also remember that no bank will ever email you asking you to send them your account details or credit card number, so beware, this is a scam.

4. Visa and MasterCard verifications

Both Visa and MasterCard have recently implemented a new layer of security for their credit card holders wanting to shop online. Visa has introduced the Verified by Visa system and MasterCard, the SecureCode. Here’s how they work:

Verified by Visa:

· The issuer of your Visa card can help you set up a unique Verified by Visa password.

· Once activated, your Verified by Visa password protects you at all participating online stores.

· Participating online stores will recognise your Visa card as having a Verified by Visa password and ask you to enter that password as part of the transaction.

· You can look for your ‘Personal Message’ on the website of a merchant you are buying from, to make sure you are really at the site of a secure online store.

· Once the transaction is complete, the issuer of your Visa card – your bank or financial institution – will verify your password before processing the payment.

MasterCard SecureCode:

· You can sign up for a SecureCode from your financial institution.

· You can choose any SecureCode, unique to you and known only to you and your bank.

· When you use your MasterCard at participating online retailers, they will ask you to also enter your SecureCode.

· When shopping online, look for the SecureCode logo so you can choose participating retailers.

5. Common sense and due diligence

Going into an online store and giving your credit card details should be preceded by the same research and common sense you would use before walking into a rickety store in a back alley – you wouldn’t go into a store which looked untrustworthy and you should take the same care to assess online stores before making a purchase.

Now you know what to look for in assessing an online store and online credit card payment system, you can more easily spot the unsafe websites where your credit card details are likely to be used fraudulently. When you’re shopping online, it can be easy to forget about doing your due diligence in choosing a reputable online retailer, but remember, a flashy website does not automatically equal a safe website so don’t be fooled. Instead, do a little research about the company, a quick Google search should turn up any scams surrounding the company or any new articles about their operations.

Once you have checked for the necessary security items on the website and investigated the merchant themselves, you can feel safe using your credit card to shop online.

Craig Here: Have any of you ever been a victim of credit card fraud? I follow #3 and #5 on the list and I’ve never had any issues.  What do you to to keep your credit card safe when you shop online?

Comments

  1. Scott Ferguson says

    We have had credit card fraud twice. However, other than the inconvenience, it had no long-term implications in that one of the advantages of using a credit card versus a debit card is that with a credit card, if you dispute a charge to the credit card company, you can only be liable for $50. In both cases, the credit card companies did not hold us liable for any amount.

    Granted, who knows where our fraud came from as we use our credit card as our main method of payment for all of our everyday purchases as well as all of our ongoing automatic charges (utilities, cell phone, cable, subscriptions, memberships, childcare, etc.). So the only downside for us when we reported the fraud, was they turned off the credit card and had to issue a new one with a new number and we had to go back and set up all of the auto pays. And we had to live without plastic for a week while awaiting the new card’s arrival in the mail!

    And before I completely make you cringe at all of this plastic use, we pay it off in full every month and use if for the airline miles (of which we are soon cashing in for a free trip to celebrate our anniversary!)

  2. says

    Amen! I LOVE websites that let me pay via PayPal…they consistently get my services. And also Mastercard’s Secure Code is pretty nifty too, it makes me feel safe ordering things online. I try to order things online to keep myself from just buying things for instant gratification. If I really need it/want it I can wait a week to get it.
    .-= lencib: Falling into Favor´s last blog ..Approaching God After Sin =-.

  3. says

    Wow, I wasn’t aware of the capability of paying with credit cards through paypal. I’m not sure if it works at all online merchants though. I’ll definitely have to look more into this.

    I also didn’t know about the new Visa and Mastercard verifications. That should add another nice layer of security when shopping. Good post. Learned something new today!
    .-= Darren´s last blog ..A Few Firsts For MORE than Finances! =-.

  4. George says

    Thanks for the tips, especially on the difference between http and https on SSL. I used to wonder why https is different.

    On my part, I use Paypal whenever I can avoid using my credit card online.
    .-= George´s last blog ..Understand Volatility and Increase Your Profit Potential! =-.

  5. theo says

    what about, buying food by phone using credit cards?
    and buying magazine using posts the one on the paper? like to subscribe something?

  6. Julie Miller says

    Paypal! No way! Myself and my grown son have had much trouble with Paypal – and it can take over a year to get resolved. I wont purchase anything thru paypal! They will fraudulantly charge your card!

  7. says

    Amazing! This blog looks just like my old one! It’s on a completely different topic
    but it has pretty much the same page layout and design.
    Superb choice of colors!

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