Let’s say you have a new credit card embedded with an EMV chip and a card with only a magnetic stripe (your EMV chip card should also have a magnetic stripe). Should you automatically start giving preference to the card with the chip? What if you get better rewards in certain categories if you use the card with the magnetic stripe?
For consumers, the main difference between the new chip cards and the old mag-stripe versions is in how you use them — you swipe a stripe or dip a chip. If there was a zero-liability policy associated with your credit card before Oct. 1, there is still one. The difference now is in whether your card issuer or the merchant must cover the cost of any fraud that occurs as counterfeit card-present transactions. (Prior to the change, financial institutions generally covered fraudulent charges.) But for consumers, again, the difference is simply in the mechanics of using the card.
The switch to chips and chip readers will take some time, and the chief inconveniences to consumers will be that new cards may have different numbers, so that any recurring charges that are routinely paid with a card will need to be updated.
And, if you’re thinking that not using the mag stripe will help speed up the whole chip-adoption process, you’re probably wrong, said credit expert Barry Paperno, who blogs at Speaking of Credit. “To stop using your mag-stripe card now is more likely to strangle your ability to make cards work for you than put pressure on card companies to accelerate the issuance of chip cards and merchants to accept them,” Paperno said in an email.
Choosing Which Card to Use
So how do you choose? The same way as before: consider your goals. “From a credit scoring perspective, whether chip or mag stripe, your score is best served by using your oldest cards with the highest credit limits and best rewards programs, while paying on time and keeping card balances low,” Paperno said. That means if rotating rewards on your old mag-stripe card will earn extra points at the drugstore and you’re there to buy some household provisions, that’s the one you use.
Whichever cards you use, you’ll want to keep the amount you charge relative to your credit limit no higher than 30% to avoid damaging your credit standing. (Not sure what that is? You can get a free credit report snapshot that includes two credit scores and a personalized plan for improvement from Credit.com.)
The reason for the switchover is better security for in-person transactions — it shouldn’t cause you to lose out on rewards or to be afraid to use your non-chip credit cards. If you haven’t yet been issued a chip credit card, it’s OK to use your old card while you wait for the chip version to arrive. (From a liability standpoint, you’re covered.) You can also call your issuer and request one be sent, if you were looking to potentially reduce the odds of having that card counterfeited.
More on Credit Cards:
- Credit.com’s Expert Credit Card Shopping Tips
- An Expert Guide to Credit Cards with Rewards
- How to Get a Credit Card with Good Credit