Credit Card Quick

Beware of Credit Card Scammers Asking for your Security Code

Identity Theft

We all know to be aware of credit card scammers, but sometimes a new scam comes along that simply throws us for a loop – and scammers are counting on it.

Many of us already know that retailers are now using the security codes on the back our credit cards as a way to curb credit card fraud. For example, the last time you made a credit card purchase over the phone or online the retailer likely asked for your credit card’s three-digit security code, as well as the card’s number and expiration date.

This is done to prevent credit card thieves from placing unauthorized charges on your credit card account without your knowledge. In other words, having a credit card holder’s credit card numbers is now simply not enough for scammers; they must also have the card’s security code to break into your account.

The Newest Scam and how it Works

Credit card scammers have now found a new way to fool credit card customers into giving up their three-digit security code (surprise, surprise), so here’s what you need to know about this scam so it doesn’t happen to you.

The scam goes something like this: a credit card thief (who is already in possession of your credit card number) calls you, claiming to be from your credit card company; probably from the security or fraud division of your credit card company. The caller then recites your address to ensure that you are the cardholder, and lets you know that your card may have been stolen, or that unauthorized charges were placed on your account.

The caller then asks you to verify that you have the card in your possession. And, of course, the only way to do this is by reciting your security code to the caller. Bingo – you’ve just been scammed.

It is important to understand that, at no time, will your credit card company ask you to reveal any private information, including your security code. If you have any doubt about the legitimacy of a call, simply hang up and contact the credit card company directly.

Say Good-Bye to Student Credit Card Incentives

Credit Card Rewards

Acquiring a student credit card will no longer be an easy feat, if the government has anything to do with it.

Because of the rising debt among younger adults – primarily those of college age – the new credit card legislation includes strict changes regarding how credit card companies target students.

A recent Sallie May survey shows that the average credit card debt among college seniors was $4,100 in 2008, compared to $2,900 in 2004. Sallie May also reports that the average college student has more than four cards, and that just 17 percent pay their balance in full every month.

We all remember the college years, when credit card marketers were perched around every corner, offering credit cards with lots of perks and incentives.

Student credit cards, however, will no longer be what they used to be, as of February 22, 2010. Credit card marketers can no longer lure students in with offers of freebies when they sign up for a credit card. Yep, gone are the days of free pizzas and t-shirts just for signing up for a credit card.

The new restrictions, which will be targeted at consumers below the age of 21 (i.e. college-age students), are designed to help young adults avoid the perils of credit card debt at such a young age. Many students with credit cards are often saddled with very high interest rates and fees, all of which make it extremely difficult for them to climb out of debt.

Other Changes in the Works

In addition to requiring credit card companies to eliminate freebies and incentives, the new legislation will also require any student under the age of 21 to either (a) provide the creditor with a source of income to show that he/she is able to pay the balance each month; or (b) have a co-signer.

The co-signer requirement may be a practical opportunity for parents to oversee their college student’s spending habits and to instill good spending habits.

Although many are opposed to the new credit card legislation aimed at young adults, many consumer advocacy groups have touted these new laws, as they will ultimately protect young adults from acquiring bad spending habits and mountains of debt that they simply cannot pay off.