Credit Cards 101: Card compromises - have you had to replace your card recently?

November 21, 9:33 PMLas Vegas Credit ExaminerLisa Stevens

Do you understand the process?  What happens and why you have to close down your card and change your number?  There are a few things you can do to prevent the amount of inconvenience these events cause.

The types of security breaches vary from databases to lost/stolen computer laptops and everything in between.  After these events happen the merchant or processing center notifies the credit card companies (MasterCard, Visa, AMEX, and Discover).  The compromised data is collected, sorted and disseminated to each of the issuing banks.  Based on banking regulations, the level of risk and other factors, the banks decide which processes to follow for closing out the cards.  Depending on the type of information that is compromised, you may or may not be notified of the source of the breach.  If your personal information was not involved you will not be notified, as is most often the case.

One of the biggest complaints card members have is updating merchants who bill automatically each month with their new card number.  If you don't have the time to do this, find this to be too much of an inconvenience, are totally outraged and fed up, the answer is simple; stop using credit cards.  There are many who believe incorrectly that the card issuers have control over this.   What you must remember is that by using credit cards, you do take on some level of risk and the cards are not owned by you the user, but by the card issuer - the bank.  The bottom line is that you don't pay for fraud, the card issuer does and they are going to do what it takes to reduce that risk including changing your credit card number. 

For those of you who choose to continue using credit cards, there are a few things you can do to make this process less of an inconvenience to you.  Start a list or spreadsheet of those merchants who bill you on a recurring basis including the contact number or website where you can update your credit card number.  Then you have a reference to help the process move quickly and easily.  The odds are stacked against you, the more you use your card, the more likely you are to have this happen to you.  And yes, it happens to every type of card, and every issuing bank.  It may seem to happen less with some than others, like Amex, but Amex has about a third the worldwide acceptance that MasterCard or Visa does, therefore it makes sense it would occur less to their card members.  Some merchants will be automatically updated of the new number through an automatic updating process with their merchant bank however it is a fee-based service and not all merchants participate.  Most issuing banks don't have the ability to know which merchants participate and which do not so they recommend you notify all merchants who bill you on a recurring basis.

Of course you could cancel all your recurring charges with all merchants and pay each merchant every month manually.  This will alleviate the inconvenience of having to notify merchants of the new number but increases the amount of time you spend each month paying every merchant.  This option seems counter productive but it would also solve the issue. 

Feel free to share your thoughts.