Home > Credit Cards > How Safe Are Credit Cards with Chips?

Comments 0 Comments

Payments started with the barter system a long time ago. People exchanged goods or services for other goods or services. Eventually legal tender took over and money, in many forms—from tea bricks to cow to seashells—become the payment method of choice. Then virtual money came on the scene, including credit cards. And today’s credit cards, have chips. Chips, Not to be confused with cow chips from cattle as money are known as EVM or Europay, MasterCard and Visa. EVM is a newer technology intended to protect users and lower the cost of fraud. But, just how safe are credit cards with chips?

The History of Credit Cards

In 1958, Bank of America successfully launched its first credit card, which later became known as the first successful modern credit card. These credit cards were supposed to be a replacement for the cash people carrier around.

Since 1958, credit cards have evolved. And one of the most recent evolutions happened in the U.S. about a year with the addition of a chip or EMV technology on credit cards. Chips replace the previous magnetic strips used on card. A magnetic strip was a black band on the top back of a credit card that relayed information about the payee, such as account number and enabled a merchant to process the payment. With the demise of mag-stripes, that information is passed through the chip.

It’s believed that cards with chips provide a layer of security that wasn’t provided by mag-stripe cards. But, just how secure are these cards and are they right for you?

Magnetic Stripe Technology

The technology of mag-stripe cards dates back 50 years and is similar to the technology used for cassette tapes. Data is loaded onto the mag stripe by the issuer. The stripe is stable and rarely degrades with time.

Whenever you make a payment with a mag-stripe card, the information loaded in the stripe is read over and over again. The down-side is that consistent data is easily stolen by thieves and hackers, because the magnetic field decodes the information and your bank information is then sent.

Thieves can use card skimmers at ATMs and other locations where you pay with your debit and credit card to steal your information. Stopping a thief from using your card information requires that you cancel your old card and get a new one loaded with new account information. But with the same technology, the new card is just as vulnerable as the old one.

EMV Chip Technology: Beneath the Hype

With the newer EMV credit card and debit card chips, the information on the card isn’t static. It’s always changing. It’s consistently decrypted, changed, and re-encrypted, which makes it harder for thieves to steal it. The chip has a mini microprocessor within it that includes a one-time code for every transaction. With a unique code for each transaction, a hacker can’t use the information, because that information was specific to a past transaction.

So, when shopping online or making payment through a physical payment point, the chip on your card sends a signal to the merchant and decrypts the language. Your payment information is then obtained using EMV authentication methods.

The chip also helps ensure that the transaction and the cardholder are verifiable. With mag-stripe cards, this is done by inputting your PIN and your card’s CV2 or security code.

In essence, your new card contains the same information your old mag-stripe card had, but the chip offers better security as it constantly generates new encrypted information, providing an extra layer of protection that mag-stripe technology couldn’t offer.

So the answer to “how safe are credit cards with chips,” is that they are safer than older card technologies.

Regardless of the added security with EMV chips, identity thieves will always attempt to steal your information in a bid to gain access to your money. So, it’s still important to take steps to protect your finances, pay for goods safely and avoid getting robbed.

Here Are a Few Ways to Keep Your Chip Credit Card Safe

1. Protect your numbers

Never tell your credit card number or PIN to anyone. With any of these numbers, it’s easier for a thiff to gain access to your account and your money. If possible, sign for transactions instead of using your PIN. This way if a false transaction happens, the blame rests on either the bank or the merchant. And never send your account number or PIN in an email, text message or social media.

2. Keep track of your bank statements

Banks are diligent in stopping fraud and preventing fraudulent activity before it happens. Several banks notify customers of an attempted unauthorized use of their debit card at suspicious locations, while other banks flag suspicious transfers and call customers immediately.

Thanks to the extra security made possible with EMV technology cards, it’s not as easy for thieves to steal information. However, it’s still important to review your bank statements regularly in order to spot suspicious transactions. If you find any of these, report the discrepancies to your bank immediately.

3. Choose alternative payment methods

A great way to ensure the safety of your information is to give preference to retailers and vendors using mobile payment technology. Doing this significantly reduces the risk of thieves stealing your information. You can also add your debit and credit cards to your phone, use mobile-friendly payment terminals to ensure your shopping experience is secure. You might also consider investing in identity theft protection.

4. Keep an eye on your credit score

Watching your credit score—not obsessively—but judiciously, can help alert you to changes in your credit, which can indicate that your account information or identity has been compromised or that you’ve had fraudulent charges made. On Credit.com, you can sign up for free access to your Experian credit score. On Credit.com, your score is updated every two weeks. And you get access to a free credit report card so you can see what steps you want to consider to keep your credit good or maybe make it better.

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.



Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team