How credit card security works

We hand over a lot of personal information to obtain credit cards — but is our information and money safe?

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It’s understandable to be worried about the safety of your money — and your personal information. From time to time, large companies and businesses lose customer data in major hacks. Credit card fraud is a growing problem — it caused an estimated US$31.26 billion in losses in 2018 alone. In 2010, it cost around US$7.60 billion worldwide, which indicates a massive increase in just eight years. If you’re concerned about your credit card information, you’re not alone. Here’s what you should know about credit card security — and how to keep your information safe.

Should I be worried about credit card fraud?

To get a credit card, you must first submit personal and financial information to a card provider. Your name, phone number, email address and residential address are a given. However you’ll also have to divulge sensitive details about your employment information, total annual income and your Social Insurance Number.

We hand over this information without a second thought – but is it safe once we part with it?

Credit card securityDo credit card companies keep my information safe?

First, the good news: As of yet, there hasn’t been a significant data breach in a major credit card company.

Large financial institutions tend to adopt security measures that are generally more sophisticated and harder for outside threats to compromise. Banks and credit card companies know it’s important for them to safeguard customers’ information and money. To that end, they’re constantly updating their security systems to guard against hacks. However, it’s not impossible for a big financial player to be breached.

Even if your credit card company closely guards your data, there’s the chance that a merchant could lose your credit card information. Your own computer hardware could be hacked, and thieves could steal your credit card information at ATMs.

So it’s not just your bank’s job to keep your information safe — it’s a good idea for you to be vigilant as well.

How to guard against fraud

Credit card fraud doesn’t happen often, but it can be incredibly inconvenient when it strikes. Though financial institutions rarely lose customer data, it’s not out of the question for it to happen.

To protect yourself, implement these safeguards:

  • Be selective about who you give information to. Think twice before applying for services from little-known financial institutions. The big players may be more expensive, but they’re better prepared to safeguard your data. Small banks are usually easier targets for hackers because they often have fewer resources.
  • Monitor your credit card transactions. Credit card providers have robust fraud departments — but you’re your own best defense. Regularly check your card’s transactions and alert your provider if you see anything fishy. It’s easy to get a replacement credit card, and you’ll typically be protected from fraudulent transactions.
  • Be wary of unknown callers and phishing emails. Your financial institution will never call you asking for sensitive information. Also be suspicious of unexpected emails that seem to be from your bank or card provider. They may be sent from thieves attempting to steal your information.
  • Check your credit reports. Monitoring your credit reports can help you spot identity theft. You can get your report from a reputable credit reporting website or from one of the two credit bureaus.
  • Initiate a “security freeze” with the major credit bureaus. If you set a security freeze, a credit bureau can’t release your credit report without your permission. This can stop identity thieves from opening new financial accounts in your name.

Your credit card spending isn’t private

Credit cards are incredibly convenient. The tradeoff for using them, however, is losing your financial anonymity.

This doesn’t mean everyone will know what you spend money on. However, your card providers will: They’re regularly slicing and dicing your card use. They can see where you’ve used your card, and they’re constantly evaluating your creditworthiness based on your spending habits.

For example, if you’ve used your card at a casino or at bail-bond shops, your provider may consider you more likely to be in financial trouble. It could mark you as a riskier borrower who might default on payments. To protect itself, your provider might take preemptive measures, like lowering your credit limit.

Fortunately, your card company isn’t allowed to share your personal information with nonaffiliated third parties. But that doesn’t mean third parties don’t have ways of monitoring your spending. Google, for instance, has ways to monitor credit and debit card transactions through its third-party partnerships.

The implication is clear: If you use credit cards, always assume someone’s monitoring your spending.

Credit card skimmers

Thieves steal credit card information in numerous ways, and one of the most common is by using credit card skimmers.

Skimmers are small, nearly undetectable devices that criminals fit onto credit card machines to read and record your credit card data. For example, a skimmer can be placed over the card slot on an ATM to steal information from a card’s magnetic stripe.

Credit card skimmers have proliferated in recent years, largely because skimmers have gotten more sophisticated. In the past, the bulkiness of a skimmer would give it away. Now they’re small and sleek, and it’s hard to tell when they’re installed.

Credit card skimmers guide

How a skimmer works

First, a thief installs a skimmer onto a credit card machine — like a store credit/debit card terminal or an ATM. Typically, fraudsters will plant skimmers where they’re less likely to be caught doing so — outdoor ATMs and gas pumps are prime targets. They may also install hidden cameras or fake keypads to steal customers’ PINs.

After some time, the thieves will return to collect the skimmer. They’ll sell the information they’ve stolen, or even use it themselves.

Is it safe to use your credit card at an ATM?

Whenever you use an ATM, consider the possibility that a skimmer is installed. ATMs inside of a bank are less likely to have been tampered with. But if you’re using an ATM in an outdoor or isolated area, the machine could be compromised.

If you must use an ATM that’s not monitored by cameras or bank personnel, make it a point to check your credit card transaction history for suspicious activity.

How to protect yourself from credit card skimmers

It’s difficult to detect all skimmers you could come across, and they’re only getting more sophisticated. However, you can minimize the risk of losing your credit card data to these devices.

  • Use ATMs attached to banks. These machines are more likely to be monitored, and they’re serviced more often than other ATMs.
  • Regularly monitor your credit card transactions. You don’t have to wait for your statement before reviewing your transactions. Just sign in to your online account to see what’s charged to your credit card, whether its been authorized or posted. If you’re vigilant about monitoring your card, you can catch fraud quickly.
  • Avoid ATMs that appear to have been tampered with. Don’t use a machine that looks suspicious, rundown or out of place. If buttons are hard to press or graphics are misaligned on the screen, take your card elsewhere.
  • Inspect hardware on ATMs. Don’t be afraid to pull at the card slot or test the machine’s keys before your transaction. A skimmer may be glued to a machine, and it could come off if you pull it.

Security measures offered by your credit card

We’ve talked considerably about how credit card information can be stolen. Still, a credit card has built-in defences against fraud – and the financial industry is always developing better tools to combat fraudsters.

Security measures guide

Fraud monitoring

One of the reasons that card companies monitor your spending is to catch fraud.

Fraud costs banks money. To avoid losses, financial institutions develop technologies that automatically detect inconsistencies in customer spending. Uncovering these anomalies is how card companies catch fraud.

There’s more good news: You most likely won’t be liable if your credit card is used fraudulently. Many banks and card providers offer “zero liability” protection for fraud. That means if your card is lost or stolen, you won’t have to pay anything.

Overall, a credit card is an excellent way to pay because it offers great consumer protections against fraud.

Why does your credit card have a chip?

A chip card is relatively secure because it encrypts account information differently each time it’s used. In contrast, data is static on a magstripe card, which means it’s easier for criminals to extract. Skimmers are highly effective at collecting data from magstripes, but they’re less adept at foiling chip cards.

Chip cards have been widely adopted around the world, with many countries, including Canada, using chip-and-PIN cards. These cards require you to enter a personal identification number. Chip-and-PIN cards are considered to be more secure, since there’s no signature to forge.

Credit cards and online purchases

E-commerce is growing fast, but consumers still have security concerns about making purchases online. The truth of the matter is that a credit card is one of the safest ways to make purchases online. As long as you’re using a trusted website and the online retailer encrypts your data, it’s safe to enter credit card information on the web.

Here are a few precautions you can take to use your credit card safely online:

  • Make sure you’re on the right website. It sounds simple, but you can lose information by submitting credit card details in the wrong place. Take a quick glance at your browser’s URL bar to confirm the web address is correct.
  • Only input credit card information if the website URL starts with “https.” This means the data you send will be encrypted. If the website URL starts with “http,” cancel your transaction – it’s not secure.
  • Use antivirus software on your computer and regularly scan your system. Your credit card data could be stolen by malware like keyloggers and screen recorders. Keep viruses and spyware off of your computer with a reputable antivirus provider like Kaspersky or Norton.
  • Don’t place orders on public Wi-Fi. Since public Wi-Fi is unsecured, it’s a prime target for hackers. Only input credit card information online when you’re on your secured home network.

Compare credit cards

Name Product Purchase Interest Rate Cash Advance Rate Annual Fee Minimum Income Benefits with this card Description
American Express Cobalt Card
19.99%
22.99%
$120
N/A
Earn 5 Membership Rewards points per $1 spent at eligible grocery stores, restaurants, bars, cafés and food delivery services, and earn 2 Membership Rewards points per $1 spent at eligible gas stations, and on transit and travel purchases, and earn 1 Membership Rewards point per $1 spent elsewhere. Terms apply
Earn up to 40,000 Membership Rewards points. In the first year, earn 2,500 Membership Rewards points for each billing period when you charge at least $500 in eligible purchases to your card (for a total earn of up to 30,000 Membership Rewards). Plus, earn up to 10,000 Membership Rewards points when you spend a total of $3,000 in purchases in your first three months
HSBC +Rewards™ Mastercard®
11.9%
11.9%
$0 annual fee for the first year ($25 thereafter)
N/A
Earn 2 Points for every $1 spent on eligible dining or entertainment purchases.
Earn 10,000 Points ($50 travel value). Plus, get a full annual fee rebate for the Primary Cardholder for the first year. Apply by June 29, 2020. This offer is only available to residents of Canada other than the province of Quebec. Conditions apply.
BMO World Elite Mastercard
19.99%
22.99%
$0 annual fee for the first year ($150 thereafter)
$80,000
Get 3 BMO Rewards points per $1 spent on eligible travel, dining and entertainment purchases (up to $50,000 spend annually), and get 2 BMO Rewards points per $1 spent on all other eligible purchases (and once you reach the $50,000 annual spend).
Earn a bonus of up to 35,000 BMO Rewards points with a minimum spend of $3,000 on eligible purchases in the first three months of card membership ($250 travel value to be used towards a flight booked through bmorewards.com). Plus, get the $150 annual fee waived in the first year.
HSBC World Elite® Mastercard®
19.9%
22.9%
$0 annual fee for the first year ($149 thereafter)
$80,000
Earn 3% in travel rewards on all eligible travel purchases (6 Points per $1 spent) and earn 1.5% in travel rewards on all other eligible purchases (3 Points per $1 spent).
Earn up to 60,000 Points ($300 travel value). Plus, get a full annual fee rebate for the Primary Cardholder for the first year. Apply by June 29, 2020. This offer is only available to residents of Canada other than the province of Quebec. Conditions apply.
Scotiabank Passport  Visa Infinite Card
19.99%
22.99%
$139
$60,000
Earn 2 Scotia Rewards points for every $1 spent on eligible grocery store, dining, entertainment and daily transit purchases, and earn 1 Scotia Rewards point for every $1 spent elsewhere.
Earn up to a total bonus of 40,000 Scotia Rewards points (up to a $400 travel value) in your first year. Earn 30,000 Bonus Scotia Rewards points when you spend at least $1,000 on eligible purchases within the first three months. Apply by July 1, 2020. Plus, earn 10,000 Bonus Scotia Rewards points each year when you spend at least $40,000 annually on eligible purchases (and earn 2,000 Bonus Scotia Rewards points for every additional $10,000 in purchases thereafter).
BMO Preferred Rate Mastercard
12.99%
12.99%
$20
$15,000
Take advantage of an introductory balance transfer offer, annual fee waiver in the first year, and low purchase and cash advance interest rates.
Get a rate of 3.99% on balance transfers for 9 months with a 1% transfer fee. Plus, get the $20 annual fee waived in the first year.
Scotia Momentum No-Fee Visa Card
7.99% intro APR for the first 6 months, 19.99% thereafter
22.99%
$0
$12,000
Get 1% cash back on all eligible gas station, grocery store and drug store purchases and recurring bill payments, and get 0.5% cash back on all other eligible purchases.
Get a 7.99% introductory interest rate on all eligible purchases for the first 6 months. Apply by July 1, 2020.
The Platinum Card from American Express
N/A
N/A
$699
N/A
Earn 3 Membership Rewards points for every $1 spent on eligible dining in Canada, 2 Membership Rewards points for every $1 spent on eligible travel purchases as well as hotel and car rental bookings made with American Express Travel, and earn 1 Membership Reward point for every $1 spent on all other eligible purchases
As a new Platinum Cardmember, earn up to 60,000 Membership Rewards points in the fist six months. Earn a Welcome Bonus of 50,000 Membership Rewards points when you spend at least $3,000 on eligible purchases within the first three months. Receive an additional 10,000 Membership Rewards points after six months of cardmembership
American Express AIR MILES Platinum Credit Card
20.99%
22.99%
$120
N/A
Earn 1 AIR MILE for every $5 spent on eligible food, drink, gas and transit purchases (up to an annual spend of $30,000), and earn 1 AIR MILE for every $10 spent on all other eligible purchases (and after the $30,000 annual spend)
Earn a Welcome Bonus of 2,000 AIR MILES when you spend at least $1,500 in eligible purchases within the first three months.
American Express Business Edge Card
19.99%
22.99%
$99
N/A
Earn 3 Membership Rewards points for every $1 spent on eligible business essentials including office supplies, electronics, rides, gas, eats and drinks (up to an annual earn of 75,000 Membership Rewards), and earn 1 Membership Reward point for every $1 spent on all other eligible purchases
Earn up to 42,000 Membership Rewards points in your first year. Earn a Welcome Bonus of 30,000 Membership Rewards points when you spend at least $5,000 on eligible purchases within the first three months, and earn 1,000 Membership Rewards points each month (a total of 12,000 annually) when you spend a minimum of $3,000 on eligible purchases
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Compare up to 4 providers

Name Product Purchase Interest Rate Cash Advance Rate Annual Fee Minimum Income Benefits with this card Description
BMO CashBack World Elite Mastercard
19.99%
22.99%
$0 annual fee for the first year ($120 thereafter)
$80,000
Earn 1.5% cash back on all eligible purchases.
Get up to 5% cash back on all eligible purchases made within the first 3 months (up to a maximum spend of $4,000). Plus, get the first year annual fee of $120 waived.
Scotiabank SCENE Visa Card
19.99%
22.99%
$0
$12,000
Earn 5 SCENE points per $1 spent at participating Cineplex theatres or cineplex.com, and earn 1 SCENE point per $1 spent on eligible purchases elsewhere.
Earn 2,500 bonus SCENE points when you spend a minimum of $500 on eligible purchases in the first three months. Apply by July 1, 2020.
BMO CashBack Mastercard
19.99%
22.99%
$0
$15,000
Get 1% cash back on all eligible purchases.
Get up to 5% cash back on all eligible purchases in the first three months of card membership (up to a maximum spend of $2,000, and earn 1% cash back thereafter). Plus, get a rate of 1.99% on balance transfers with a 1% balance transfer fee for nine months.
Shell CashBack World Mastercard from BMO
19.99%
22.99%
$79
$60,000
Get 3% cash back per $1 spent at Shells stations, 1.25% cash back on all other spend.
Earn 3% cash back at Shell stations in Canada, plus 1.25% cash back on all other spend.
Scotiabank GM Visa Infinite Card
19.99%
22.99%
$0 annual fee for the first year ($79 thereafter)
$60,000
Earn 5% in GM Earnings on the first $10,000 annual spend, and earn 2% in GM Earnings thereafter.
Get the annual fee waived in the first year on the primary card as well as any supplementary cards. Apply by July 1, 2020.
BMO CashBack Mastercard For Students
19.99%
22.99%
$0
$15,000
Get 1% cash back on all eligible purchases.
Get up to 5% cash back in the first three months (up to a maximum spend of $2,000). Plus, get a rate of 1.99% on balance transfers for 9 months, with a 1% fee for every transferred balance.
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Name Product Required Deposit Purchase Interest Rate Cash Advance Rate Annual Fee Reward
Refresh Financial Secured Credit Card
$200 - $10,000
17.99%
N/A
$12.95
Take advantage of a low annual fee, with no credit check and guaranteed approval once you secure your credit card with some funds.
Take advantage of a low annual fee, with guaranteed approval and no credit check.
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*The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.

Are credit cards still more secure than carrying cash?

When it comes to fraud, is cash a better option than a credit card? While there are some pros to using cash, credit cards have the edge for safeguarding your money.

Both cards and cash can be stolen, but you’re unlikely to recover cash once it’s gone. On the other hand, you can quickly replace a stolen card. It’s also unlikely that you’ll lose money from a stolen credit card, because you typically won’t have to pay for fraudulent transactions.

For safeguarding your information, cash is the hands-down winner. To get a credit card, you have to submit personal information like your Social Insurance Number and contact details. If your card data is stolen, your information could be sold. Meanwhile, cash transactions can’t be traced back to you.

Overall, credit cards are better at safeguarding your money. Just remember that you’ll give up some privacy to use them.

General tips for using your credit card securely

  • Carefully examine your monthly card statement. If you don’t recognize any charges, notify your card provider. This is one of the best ways to protect yourself against fraud.
  • Sign your card. Merchants are supposed to match your signature to what you sign on your receipt. Merchants don’t always do this, of course, but signing your card can give you important protections from your card provider, such as zero-liability guarantees.
  • Be careful with your receipts. Never leave a receipt behind at an ATM or a store counter, and shred them before tossing.
  • Carefully examine your monthly card statement. If you don’t recognize a charge, notify your card provider.
  • Only give your credit card number over the phone if you’re the one calling. You may need to input your card number if you’re calling customer support, but your bank will never call asking for your card information.
  • Know which phone number to call if you have problems with your card. If your card is lost or stolen, have a phone number on hand to cancel the card immediately. The sooner you cancel, the less time a thief has to use your card.

How the government protects consumer privacy

Consumer privacy is governed by both federal and provincial/territorial laws. These laws, which include the Personal Information Protection and Electronic Documents Act, protect consumers against fraud and privacy abuses. This act provides legislation, ensures compliance, deals with complaints and enforcement, and investigates any businesses breaching privacy laws.

Frequently asked questions about credit card security

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