That Chip on Your Credit Card May Not Be Stopping Fraud After All

It's a different world, where the science and technology have registered some of the most magnificent developments and innovations, which are potentially, help the society in having a massive growth in almost all sectors. The advent of the computer and the internet are one of the major inventions of the scientific development, which have changed the world to a great extent and today we can find some sort of touches in almost all products and issues in our existing society.

While the primary sectors are getting huge supports from the computer technology; the financial sector also has seen some of the major breakthroughs in the operation and management of the financial instruments and data. The Credit card is considered as one of the important issues in the financial market, which is now being used by millions of users, throughout the globe, for ease and comfort.

Today the credit card or debit card are using as the avenue of the cashless transaction, which safeguards the malpractices and helps in efficient accounting purpose. It can be noted that the safety of using the credit card is getting the highest priority and several measures are being taken to get the utmost safety of the cards, which are often found quite inadequate and vulnerable.

Credit Card and Relevant Issues

It is now known to everybody that the transaction through these cards are quite popular among the people, especially in the younger generation, and there are lots of chips and other devices are being used in order to check potential frauds. But at the same time; the fact is that there are some problems inherent in these chips, which are essentially meant for the safety of the credit cards. In the present scenario, the security chips are widely used in the financial world and it becomes a bit difficult for the criminals to counterfeit any debit or credit card.

But in recent days, the fraudulent activities are on a rise and various criminals are now pilfering cash from the plastic card by using some different mode of operation, which is considered as a great threat to the general people, who are using the credit card for convenience and safety. The new study, done by the renowned research organization, Javelin Strategy and Research, has made some unique revelations in the frauds of the credit card, which are as follows:

• The most common identity fraud has been rose about 16% in the year 2016, which cost individual an all-time high of USD 16 billion; 
• About 15.4 million people are affected by this kind of fraud, which is about 6.15% of the total consumers and a 2 million more from the earlier year i.e. 2015;
• While the study was not been done exclusively for the credit cards, but the researchers made it a point that the majority of these identity thefts are predominantly linked with to the credit cards; 
• This escalation in fraudulent activities, which is about USD 700 million more than the previous year, seems to be unspecified.

Free Envelope Budgeting System

We've all heard the financial gurus tell you about the benefits of cash. From Suze Orman to Dave Ramsey, cash is considered king whenever you are trying to control your budget. Each person explains a proprietary system to do this. I want to give you a cash management system for free.

 

I love to use cash because there is no late payments or interest. Its finite (which can be a double edged sword) and you can physically see how much is left in your personal budget. It pains me to break a 100 for a 35 dollar transaction. Since it is normal for humans to avoid pain, I tend to really think hard about breaking large bills for transactions.

 

Lets first debunk some common issues why people do not use cash. Whenever I think about it, it really boils down to two main issues against the use of cash.

 

Cash is unsafe, or I need a credit card for something something.

 

Lets discuss "Cash is unsafe". You may hear this rephrased as: "Cash can be stolen, lost, you can be mugged, etc..."

 

This is true. You can be mugged, cash be lost, a wallet stolen. Also a meteor. could crash on your head. I'm not denying that this cannot happen, but basic common sense can prevent many of these issues; however, let me tell you this. If you lose your cash, you can be out a couple hundred dollars (if you decide to carry that much).

 

But what is worse? Losing a couple bucks or Identity Theft? If you didn't know. The average amount lost because of Identity theft is $5,000. Not to mention the months it takes to fight collectors and to repair your credit. Yes, cash has risks, but compared to the cost of Identity theft, its a drop in the bucket.

 

The second most common excuse not to use cash is that you need a credit card for:

• Car rentals
• Credit rating
• Online Transactions
• Security (which deals with Identity Theft)
• Ease
• Online tracking of spending.
• Other reasons.

Unlike some people. I don't believe in getting rid of all credit cards. I have two I use and 2 I keep open just for credit ratings. I budget out what I plan to spend and if that needs a credit card. I automatically set aside in cash that money, so when I do swipe the card, I can pay it in full. This works well when coupled with a good rewards card.

 

Enough being a cash apologetic. Lets talk about the system:

 

The CIK System (Cash Is King):

 

In our checking account we have a 100 dollar buffer, money to cover the months bills and fuel cost (my wife doesn't like paying cash at the gas station), and we deposit from our cash pile (more like a mole hill) whenever I use the credit card. The rest of our expenses is withdrawn once a week in cash at the ATM, and that is what we use for the week. This allows us to keep on budget while not having to give up our auto bill pay. We place the cash in envelopes with the budget category on the outside and amount on the outside (we use Dave Ramsey's envelope system for this). Just like a check register, we record transactions. Once the money is gone, its done. No running to the ATM or swiping a card. In the rare event that we don't have enough cash to pay for something (like at a restaurant) we swipe then afterwards deposit the cash ASAP.

 

Doing this method my wife and I save $300 dollars a month and here is how we did it in nine steps:

1. Total all the money you spend in a month.
2. Subtract all bills that are deducted automatically or could be paid with Auto Bill Pay.
3. Once you have the total divide it by 4 (4 weeks in a month).
4. KEY PART: Take the weekly total and subtract 10%. Round down to the next smallest domination your ATM will issue*.
5. Distribute cash to envelopes.
6. Repeat once a week.
7. Every month try to increase the 10% in increments of 5. I managed to get my family to 20%. You can almost make this a game. Adjust as needed, but always aim for at least 10%.
8. Your checking account should have a $100 dollar buffer*, money to cover fuel cost if you do not want to use cash, and money to cover your bills.