Credit cards have chips for added security. Also known as EMV cards, these credit cards have a small metallic microchip that card readers use to process transactions. During payment, the microchip generates a unique code for the transaction which cannot be used for future purchases.
Some older credit cards have only a magnetic stripe to swipe for payments. This stripe generates the same information for each transaction, leaving the card more at risk for fraud. Credit cards in the U.S. with chips are still issued with magnetic stripes as a backup since chip-enabled card readers aren’t offered everywhere just yet. That’s largely because they’re so expensive.
When a card reader lacks chip technology, you’ll be asked to swipe your card using the magnetic stripe. In those cases, your card is less protected than if you could “dip” your chip instead. All major credit cards have $0 fraud liability policies, meaning you won’t be held accountable for fraudulent purchases. But you don’t want to go through the process of reporting and correcting fraud, so you should use your credit card’s chip whenever possible.
Credit cards with chips come in two major varieties: chip-and-signature and chip-and-PIN. Chip and signature cards aren’t quite as secure, but they’re still more widespread in the U.S.
In practical terms, credit cards have chips because U.S. card networks and issuers have taken big steps to make sure cardholders are able to use EMV chip technology. Merchants are also liable for fraudulent charges made with swiped credit cards (but not “dipped” chip credit cards) now, so there’s an incentive for merchants to make the leap to chip card readers.
A chip-and-PIN credit card works a lot like a traditional debit card at an ATM. Rather than swiping a magnetic stripe credit card, you insert (or “dip”) a chip-and-PIN card into a payment terminal and follow the prompt to input your PIN. The PIN is then compared to information stored on the embedded computer chip, and the transaction is either approved or denied.… read full answer
Such transactions are the norm in many countries and are becoming increasingly common in the United States, as the country transitions to EMV payments. But chip-based cards still come with magnetic stripes because there are many places where you won’t be able to use the chip-and-PIN feature. You will have to swipe your card, like with a normal credit card.
Chip cards can be skimmed because of the magnetic strip that still exists on these cards. Skimming is a common scam in which fraudsters attach a tiny device, or “skimmer,” to a card reader. They tend to target places like ATMs and gas stations. When you use your card at one of these readers, the device intercepts and copies sensitive card information from the magnetic stripe. Thieves can then retrieve the stolen data and can either clone the card or sell the card number to other scammers. Information on a chip card’s embedded microchip is not compromised.… read full answer
Magnetic strip cards are inherently vulnerable to fraud. Their flaws have led to the transition to chip-enabled, or EMV (Euro, Mastercard, Visa) cards, which offer tighter security measures to combat potential fraud and identity theft. However, many merchants in the U.S. still lack readers that can effectively process chip card transactions. As a result, credit cards and debit cards are still issued with magnetic stripes, and the security risks that come with them.
With that being said, all the major credit card networks offer a $0 liability guarantee for fraudulent credit card transactions. If your chip card is ever skimmed, you won’t be responsible for any fraudulent charges. In addition, federal law limits your liability to $50 if you report any fraudulent charges within 60 days of them appearing on your credit card statement.
You only need a PIN if you plan to use your card for cash advances at ATMs or to make purchases at automated kiosks, such as you might find in train stations or parking lots, when traveling abroad. Otherwise, no PIN is necessary. … read full answer
To request a PIN, you will need to call the number on the back of your card.
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