Did your bank recently send you a new credit or debit card with a shiny, metallic chip on the front? You may have noticed that some cards have this chip in addition to the standard magnetic stripe on the back of the card. Lately, we’ve received questions from people wanting to know what these chips are and how they work. Because security is often people’s number one concern, we’ve also heard from consumers who want to know what they can do to protect their bank accounts, credit cards, and personal financial information.
As a new federal agency, we’re committed to providing you with trustworthy information about consumer financial products—including bank accounts and credit cards. Here are a few things you should know about chip technology.
What’s chip technology?
Chip technology is designed to help cut down on credit and debit card fraud. The technology has been in use in other countries for some time.
For credit and debit cards to work, they have to provide information—your so-called “payment credentials”—to the merchant that takes your card. The merchant uses that information to authorize the transaction. This is what that magnetic stripe, also known as a “mag stripe,” on the back of your card currently does. That’s what the new chips will do, too.
Why does this matter to me?
For consumers, the important difference between chips and mag stripes is that it’s more difficult for a fraudster to make a fake chip card than to make a fake mag stripe card.
The shift to chip cards won’t affect your legal rights that protect you from credit card and debit card fraud. But to be fully protected, you must still review your credit card and debit card statements regularly—and report fraudulent charges immediately. We have some practical suggestions for how to continue to protect your accounts below.
How do I use my chip card?
Instead of swiping your card through the payment terminal, with a chip card, you insert the end with the chip into the slot at the front of that terminal. You do this with the front of the card (and the chip) facing up. Terminals take slightly longer to read a chip card than a mag stripe, so wait for the terminal’s instructions before you remove your card.
Where can I use my chip card?
Not every place you shop will be able to read chip cards yet. If the store accepts credit and debit cards but doesn’t have terminals that can read chip cards, you can still shop there. You’ll just need to use the magnetic stripe on the back of your card. Over time, you’ll see more and more terminals that read chip cards.
What about online and mobile payments?
You can use your chip card to make mobile or online payments the same way you you’ve been using your old card.
Why is this happening now?
There’s no law requiring your credit card company to give you a chip card. That’s true for debit cards as well. Likewise, there is no law saying that stores have to install terminals that can read chip cards—or turn on chip card technology even if they do have these terminals.
Even so, you’re going to see a lot more chip cards and chip card readers in the months to come. Beginning in October, card companies and stores are changing how they divide up responsibility for card fraud. Those changes are creating incentives for merchants to install chip card terminals and for banks and credit unions to issue chip cards. So, a lot of card companies and merchants are rolling out this technology as soon as they can.
What if I don’t have a chip card yet?
You can still keep using your card, and you’ll be able to swipe your mag stripe through card readers. Keep in mind that your bank or credit union will most likely send you a chip card in the future.
How you can protect your accounts
The shift to chip cards is an important step in combating fraud, but experts agree that chip cards are not going to make card fraud go away. Fraudsters will still try to make money by stealing card data, and you’ll still need to protect yourself by taking some basic precautions:
• Check your accounts for unauthorized charges or debits regularly. Sometimes fraudsters will process a small debit or charge against your account and return to add more charges if the first transaction goes through. If you have online or mobile access to your accounts, check your transactions regularly. If you receive paper statements, be sure to open them and review them closely.
• Report a suspicious charge or debit immediately. Contact your bank or card provider immediately if you suspect an unauthorized debit or charge. If a thief charges items to your account, you should cancel the card and have it replaced before more transactions come through. Even if you’re not sure that PIN information was taken, consider changing your PIN just to be on the safe side.
Watch accounts closely when account data is hacked and report suspicious charges
If a thief takes money from your bank account by debit, or charges items to your credit card, you should cancel the card and have it replaced before more transactions come through. You should also consider changing your PIN just to be on the safe side.
Your best step to protect yourself from unauthorized charges or debits to your accounts is to report that your card or your information has been lost or stolen promptly after you learn of it.
For credit cards
If your account number, not your physical credit card, has been stolen, you are not responsible for unauthorized charges under federal law.
For debit cards
If an unauthorized transaction appears on your statement (but your card or PIN has not been lost or stolen), under federal law you will not be liable for the debit if you report it within 60 days after your account statement is sent to you. But if the charge goes unreported for more than 60 days, your money, and future charges by the same person, could be lost. There are timelines for the bank to investigate and recredit the missing funds to the account after you make a timely report about the problem.
The time for you to report is much shorter if your card or PIN has been lost or stolen (2 business days, in order to limit your liability to no more than $50 of unauthorized charges), so make the report as soon as you learn that your card is missing or your PIN has been stolen.
For payroll, government benefit, and prepaid cards
For these types of cards, your rights vary depending on the card. If you suspect information from a payroll, government benefit, or prepaid card was stolen, check with the provider to find out its policy and deadlines for disputing charges. Your rights vary depending on the type of card.
You can also learn more about your card protections at
consumerfinance.gov/askcfpb.
How to report a suspicious charge or debit
If you spot a fraudulent transaction, call the card provider’s toll-free customer service number immediately. Ask how you can follow up with a written communication. Your monthly statement or error resolution notice also likely includes instructions on how and where to report fraudulent charges or billing disputes.
When you communicate in writing, be sure to keep a copy for your records. Write down the dates you make follow-up calls and keep this information together in a file.
Tip: If you get a replacement card, remember to update any automatic payments linked to the card.
