New Credit and Debit Chip Cards

Banks and card issuers have been sending out new credit and debit chip cards, usually as existing cards expire or need replacement.  If you haven’t gotten your new cards, don’t worry.  The rollout will continue at least through 2016.  If you want to know when yours new chip cards will arrive, contact your card issuers at the phone numbers on your cards.

Your new cards look like your old cards with one exception.  New cards have a small square metallic chip on the front.  The chip holds your payment data—some of which is currently held on the magnetic stripe on your old cards—and provides a unique code for each purchase.  The metallic chip is designed to reduce fraud, including counterfeiting.

Here’s how it works: To buy something in a store, instead of swiping your card, you’ll put it into a reader for few seconds.  Then you might have to sign or enter a PIN.  With each transaction, the chip generates a unique code needed for approval.  The code is good only for that transaction.  Because the security is always changing, it’s more difficult for someone to steal and use.

There will be no change in how you use your card online or by phone.  That means chip cards won’t prevent crooks from using stolen card numbers to buy online or by phone.  So it’s a good idea to still guard your card information closely, and check statements for suspicious activity.  If there is a problem, your consumer protections remain the same.

For more information, click here.

Teaching Suggestions

  • Ask students if they have received a new chip credit or debit card. Show how the new card differs from the old card.
  • Do you believe that new cards will help reduce fraud? Why or why not?

Discussion Questions

  1. How might scammers try to take advantage of the millions of consumers who have not yet received a chip card?
  2. How can you protect yourself from the scammers?
Categories: Chapter 5, Credit Cards, Frauds and Scams, Identity Theft | Tags: , | Leave a comment

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