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How to protect your credit from holiday shopping

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The holidays have a tendency to throw things out of whack – your schedule, your budget and possibly even your credit.

Your in-the-moment decisions at the register as well as the cumulative effects of holiday spending can have a ripple effect on your credit — but doing the following will help it emerge from the holidays unscathed or even improved. escalators in shopping mall

Know where you stand before the holidays get into full swing

Being overextended or in default can lower your credit score and block your access to new credit. So it’s important to pull your credit reports for a clear credit snapshot before the holidays do any more damage.

“Your credit report is a good place to start with a financial review for holidays because it’s going to show you how much you owe,” says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. “You may have forgotten some of those accounts. Getting your credit report will really be eye-opening.”

You can get a free credit report from each of the three major bureaus every year from If you’ve exhausted those, consider signing up for a free credit-tracking service like Credit Sesame or Credit Karma. Those sites let you access your Experian and TransUnion data, respectively, and get an overview of your existing accounts and how much you owe on each.

So what if the picture of your credit isn’t flattering?

“The worst-case scenario is you have people still paying for holiday 2013,” Cunningham says.

If that’s you, put your cards away and do the holidays on a cash basis – not that it’ll be easy.

“That’s going to mean rethinking gift giving, travel, entertaining, everything to do with the holidays,” Cunningham says. “But it’s not a gift to anyone to get into financial distress as a result of holiday spending.”

Watch your utilization

Determining your credit utilization ratio is a simple. Divide how much you owe by how much available credit you have.

If your utilization is too high, it can hurt your credit score (30 percent of your FICO score, for example, is determined by amounts owed). Cunningham recommends keeping utilization under 30 percent.

If you’re spending more on your cards over the holidays, it stands to reason that your utilization could creep higher and lower your score. But should you care? That depends on your plans right after the holidays, says Doug Minor, credit expert, legal consultant and author of the upcoming book “Your Credit, Your Life.”

“The question is, is your utilization going to put you in a position where your score is low enough to cause a problem?” Minor says.

Planning on getting a car loan or a mortgage early in the new year? A lowered score could affect the terms and interest rate, costing you more money in the long run. However, if you have no immediate need for new credit, that holiday-related blip in your score may not affect your life at all. Plus, if you pay down your balance and reduce your utilization, the credit damage will be undone.

“The potential for [utilization] to impact your credits score is only for that period of time that higher balance is reported,” Minor says.

Even so, don’t carry a heavy utilization for too long.

“Nobody has a crystal ball that will tell you if you’re going to need credit for an emergency,” Cunningham says.

If, for whatever reason, you want to keep your utilization low over the holidays (and still want to spend more on your cards), one solution might be increasing your available credit beforehand. Doing so makes any balances lower by comparison and lowers your utilization. If your score is good (and you can handle the new line responsibly), you might apply for a new card. Or, you might ask your issuer for a credit limit increase on an existing card.

Watch out, though: Applying for new credit means hard inquiries on your credit reports, which can also lower your credit scores. If you’re lucky, however, credit limit increases on existing cards may not require a hard inquiry.

“When you contact the creditor and ask for the increase, ask if they can increase it based on your past payment history with them, rather than running a credit report and causing an inquiry,” Minor says. store credit card

Scrutinize store card offers

Seeing a frighteningly high number on the register might make applying for the store’s credit card and saving an extra 5 percent, 10 percent (or even more) a tempting prospect. Just think ahead a bit.

“You’ve just put another inquiry on your report,” Cunningham says. “And you’ve put more plastic in your wallet. More plastic means more temptation.”

Plus, Cunningham points out, store cards often come with credit limits that match (or are barely above) the amount of your purchase.

“So you’ve just maxed out that new card,” Cunningham says.

Minor says applying for a store card may be worth it for a large purchase and a significant discount – assuming you’re not the type to apply for every card you’re offered.

“Just be conscious and selective and make sure that it’s worth it to you to cause that inquiry,” he says.

Use 0 percent deals responsibly

Some cards offer an introductory period (generally six months or more) that gives you a 0 percent APR on purchases. That could provide some breathing room if you need a couple extra months to pay off your holiday purchases.

What’s more, if you use that card “proactively and responsibly,” it can help your credit, Minor points out.

“Because now you have another credit line showing on your profile, and now you have more of a limit to use,” Minor says. “Used correctly, it should be a positive.”

Just make sure you know the rules. A late payment might end your 0 percent period prematurely. And some store cards that offer 0 percent deals have another twist, Cunningham points out: retroactive interest. If you pay late, you’ll be charged interest, retroactively, from the date of purchase.

“You’ve just put another inquiry on your report,” Cunningham says. “And you’ve put more plastic in your wallet. More plastic means more temptation.”

Plus, Cunningham points out, store cards often come with a credit limit that matches (or is barely above) the amount of your purchase.
“So you’ve just maxed out that new card,” Cunningham says.

Minor says applying for a store card may be worth it for a large purchase and a significant discount – assuming you’re not the type to apply for every card you’re offered.

“Just be conscious and selective and make sure that it’s worth it to you to cause that inquiry,” he says.

Remember your payment due date

If you miss a payment date amid the holiday shuffle, you shouldn’t have to worry about credit damage – as long as you miss only one payment. Issuers generally won’t report late payments to the credit bureaus until you’re more than 30 days late, Minor says. So, if your due date happens to be Dec. 25, and you realize your mistake on Jan. 10, expect a late payment fee.

“But as long as it doesn’t go past that 30-day point, it won’t affect your score,” Minor says.

Messed up? Turn it around in the new year

If you emerge from the holidays with maxed out cards and not enough funds to pay them, it’s vital to undo the damage not only to save yourself interest payments, but to get your utilization down to a healthy level so that you become a good credit candidate.

Remember when you calculated how much you owed across all your cards before the holidays? Get back to that amount, and do it quickly.

“Say your balance before the holidays was $1,000,” Cunningham says. “In January 2015, it’s $2,000. So $1,000 is what you must absolutely promise to pay in the first quarter to get yourself even.”

Also, don’t go delinquent. Skipping payments for several payment cycles will trash your score. If you can pay only the minimum, pay that.

“I don’t want people to make a habit of just paying the minimum,” Minor says. “But if you’re a little thin because you had to spend on the plane tickets home, make the minimum payment, or a little bit more than that, until you’re in a better situation.”

Whatever damage your credit undergoes over the holidays, remember this:

“Your credit score is not a life sentence,” Minor says. “If you’re proactive, it will recover in time.”

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Why was I charged interest on a zero balance?

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After carrying a credit card balance for months (or years), you’ve made what you thought is your final payment. But then, when your next statement closes, a charge for a few dollars in interest appears.

The ghost of your debt is living on in the form of what’s called “residual interest” or “trailing interest.” It’s a confusing concept, one that’s tripped up even some of our forum members. minimum interest charge

Here’s what’s going on – and how to put your debt permanently to rest.

Why am I being charged interest on paid-off credit card debt?

Residual interest will affect you only in a rare and specific circumstance, says Nessa Feddis, senior vice president and deputy chief counsel for consumer protection and payments at the American Bankers Association.

“It happens when a person goes from being a revolver to a non-revolver,” Feddis says.

In other words, you’ve gone from carrying a balance from month to month to paying in full.

Those who have been paying in full for at least two months in a row don’t have to worry about residual interest. But those carrying balances have forfeited the grace period (the time you’re allotted to pay your bill without interest accruing). That means interest is calculated each day the balance remains outstanding.

When you send in what you think is your final payment, there’s probably a delay in the bank receiving it. Perhaps you received a statement on the 15th of the month and pay on the 25th. The issuer then processes your payment and deducts it from your balance on the 26th (or even later if you mailed a check). During that gap, interest is accruing on your balance.

“Usually it’s a very small amount,” Feddis says. “You’re talking cents. It’s not a lot of money. It just reflects the fact that, like any loan, interest accrues on a daily basis.”

If you keep using the card, you’ll simply see the residual interest charges on your next statement. It can be more jarring for those who plan to never use the card again, put it out of sight and out of mind, and then find they still owe a small balance for reasons they don’t understand.

Dealing with trailing interest

Take the following steps to avoid getting tripped up by trailing interest:

  • Before you go from revolving to paying in full, cease all use of your card. Go online, use a mobile app or call your bank to get your current up-to-the-minute balance.

    “You don’t have to wait until the statement is sent,” Feddis says. “Anyone can go online and look at their balance, pay it in full and just not use the account until the payment is reflected on their account.”

  • Note that, even if you pay online, it may take a day (or more if you pay on a weekend) for the payment to be processed.
  • Once a zero balance is reflected, use your card again if you wish.

    “The point is that your payment arrives before your next transaction,” Feddis says.

  • Note that any delays in payment processing may still cause a small amount of trailing interest. If you’ve put your card in the sock drawer, remember to read all communication from your bank so you know if you owe anything.
  • Pay those couple cents or dollars of trailing interest as soon as they appear on your account. Your bank may agree to waive the small amount if you call and ask, but “it’s not something to be ignored,” Feddis says. “People need to tidy up loose ends.”
  • Keep your card in the drawer, cancel it or use it as you see fit. If you continue to pay in full, there’s no need to worry about residual interest.

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Credit cards that can help you earn a cruise

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Convenient and relaxing, cruises are the ideal vacation for many. Yet, with an average outlay of $214.44 per passenger per day (according to stats from Cruise Market Watch), several days at sea can cost you a bundle, especially if you’re traveling with your family.

So credit cards that let you earn a cruise through your spending might seem like a great way to reduce the price of your dream trip. You have many choices. Not only do many cruise lines have their own co-branded rewards cards, but some general-purpose travel cards offer cruise rewards, too. So, which is the best route?

First, here’s a look at some cruise-line-specific cards and which redemption options they offer.

Carnival FunPoints card: No annual fee. This card lets you redeem your FunPoints for cruise discounts (in the form of a statement credit), onboard purchases, shore excursions and onboard experiences (such as spa credits). You can also redeem for cruises with Princess, Costa Cruises, Holland America Line and more.

You earn 2 FunPoints per dollar spent with Carnival and 1 FunPoint per dollar spent elsewhere. Point value varies. For example:

  • 10,000 points = $100 off a cruise
  • 12,500 points = $100 onboard credit

princess cruises credit cardPrincess Cruises Rewards Visa: No annual fee. You can redeem for cruise discounts (in the form of statement credits), statement credits against airfare and onboard experiences (such as a balcony breakfast). You’ll earn 2 points per dollar spent with Princess and 1 point per dollar elsewhere. Point value varies. For example:

  • 200,000 points = cruise discount “up to $3,000”
  • 50,000 points = $500 statement credit against airfare

holland america credit cardHolland America Rewards Visa: No annual fee. No foreign transaction fees. You can redeem for statement credits against cruises and flights, onboard experiences and purchases (beverage cards, for example).

Earn 2 points per dollar spent with Holland America and 1 point per dollar elsewhere.

  • 5,000 points = $50 beverage card
  • 25,000 points = $250 statement credit against airfare
  • 40,000 points = $500 statement credit against cruise

royal caribbean credit cardRoyal Caribbean Visa: No annual fee. Earn 2 MyCruise points on Royal Caribbean Purchases (as well as with Celebrity Cruises and Azamara Club Cruises) and 1 MyCruise point per dollar elsewhere.

Points can be redeemed for onboard credit, stateroom upgrades, travel merchandise, cruises on Royal Caribbean and other brands listed above, and charitable donations.

  • 10,000 points = $100 onboard credit
  • 5,000 points = $50 onboard credit, upgrade worth $50

Norwegian cruise cardNorwegian Cruise Line MasterCard with WorldPoints: No annual fee. You’ll earn 1 point per dollar in net purchases and double points on Norwegian Cruise Line purchases. Redemption options include cruises, room upgrades, onboard credits, car rentals and hotel stays. For example:

  • 5,000 points = $50 onboard credit
  • 10,000 points = $100 onboard credit, $100 cruise discount or up to 2-category stateroom upgrade on a cruise of five days or more

celebrity cruise cardCelebrity Cruises cards:

No-annual-fee version: Earn 2 points for every dollar spent with Celebrity (and sister lines Royal Caribbean and Azamara Club Cruises) and 1 point per dollar spent elsewhere.

Annual-fee version ($69): Earn 2 points for every dollar spent with Celebrity (and sister lines Royal Caribbean and Azamara Club Cruises) and 1 point per dollar spent elsewhere. Plus a variety of additional cruise discounts, dining discounts, beverage package discounts and companion airfare discounts. You also get 10,000 bonus points each year you make $10,000 in purchases.

For both cards, you can redeem for onboard credit, merchandise and cruise vacations. For example:

  • 10,000 points = $100 onboard credit
  • 5,000 points = $50 onboard credit

In sum: Cruise line-specific cards give you average rewards for all your spending and extra rewards for spending with their line. Your redemption value hovers around 1 cent per point (sometimes a bit more, sometimes a bit less), and your redemption options are generally limited to cruises (or cruise-related upgrades, meals and drinks) — although some cards let you redeem for statement credits against airfare.

Another option — generic travel rewards cards

This breed of card allows you to accumulate “points” or “miles” that can be cashed in as statement credits toward travel. You can often redeem for cash back or merchandise as well, but expect the value of your points to be lower than it is for travel redemptions.

General-purpose travel cards are a particularly flexible option because they let you redeem towards a slew of travel expenses — airfare, train tickets, campground fees and, of course, cruises — and not just on a specific line. Each point or mile is generally worth 1 cent each when it comes time to redeem for cruises or any other type of travel.

Here’s a look at a few options (all of which let you redeem for cruises):

Capital one Venture ($59 annual fee, waived first year) and VentureOne ($0 annual fee): You’ll earn 2 miles per dollar on all qualified spending with the Venture and 1.25 miles per dollar on the VentureOne.

After you book your cruise, you can redeem your miles for a statement credit against it.

Chase Sapphire Preferred ($95 annual fee, waived first year): You’ll earn 2 points per dollar on travel and dining and 1 point per dollar on everything else. When it’s time to book your cruise, you can spend your points via Chase Ultimate Rewards and get 20 percent off.

American Express Blue Sky ($0 annual fee): Earn one point per dollar on all eligible spending. At redemption time, however, you’ll get extra value out of your points, as 7,500 points are good for a $100 statement credit against travel (including cruises).

So what’s the best credit card for cruises?

The case for cruise cards: Co-branded cruise line cards are best for those who are loyal to a particular line and spend enough on that particular line to get a lot of benefit out of the double points. If you take your family of four on two cruises a year, your favorite cruise line’s card may fit the bill. These cards are also beneficial because they allow you to redeem for all sorts of on-board extras and upgrades. Finally, most cruise cards don’t have annual fees, so you can pocket all the savings.

The case for general travel cards: If you don’t cruise that often, you’re probably better off getting a general-purpose travel card. If you decide to nix the cruise and take a flight to Europe and travel around by rail instead, your points/miles will still be good for that. Furthermore, if you’d like to shop around for the most affordable cruise, your points/miles will be good on all cruise lines — not just the ones specified by your card.

While some of the cards above have annual fees, they might offer extra points on all travel purchases (not purchases made with a specific cruise line), or even on all purchases. That means a greater variety of purchases will help you make extra headway toward a discount on your next cruise.

Written or last updated on Oct. 24, 2014

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

The truth about preapproved credit cards

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Getting courted by issuers with mailboxes full of credit card offers? Their pickup lines may be anything from “You’re preapproved,” to “You’re invited to apply,” to “You’ve been prescreened.”

Whether you’re flattered or annoyed, here’s how to read between the lines of these offers — and why you’re getting so many.approved stamp

The wording makes a difference

Credit card mailings fall into two categories, explains Kevin Haney, a former sales director at a big-three credit bureau who now shares in industry insights at

“Either credit information was used to determined who got that piece of mail, or it wasn’t.”

Situation #1 — Credit information was used: These are your “preapproved,” “preselected” or “prescreened” mailings, although different wording might be used.

Before sending you these offers, the issuers have looked into your credit history, says Lisa Hronek, research analyst at marketing research firm Mintel Comperemedia.

“They want someone who is going to use the card, but also pay it responsibly,” Hronek says.

So how do issuers check your credit? They turn to the consumer credit bureaus with a list of credit-related must-haves – or must-not-haves.

“They might say, ‘we don’t want anyone who’s bankrupt, and we don’t want anyone who’s more than 90 days late today,’ and the list goes on and on,” Haney says.

Issuers look at your credit scores, too, Haney says — your FICO scores, or any of the hundreds of other custom scores out there.

The credit bureau then responds to the issuer with a list that contains only the consumers who fit the desired credit history and score profile.

“[Issuers] don’t want to spend money printing out envelopes, paper and postage, and mailing offers to people who are never going to qualify,” Haney says.

Situation # 2 — Credit information was not used: Because such offers often use the language “Invitation to apply,” the industry short-hand for them is ITA.

“The invitation to apply is a very general mailing, and the recipient’s credit file has not been looked at to determine creditworthiness,” Hronek says.

Instead of checking credit, issuers determine who gets ITAs based on things like magazine subscriptions, gift registries and club memberships (which they buy from the companies that maintain those lists). Sometimes an airline card issuer will send them to people that are part of the affiliated airline’s frequent flier program.

So which type is the offer in your inbox? Issuers can get creative with their wording, so it can be hard to tell. But one clue, Haney says, is whether the offer contains a prescreen opt-out notice – fine print that explains how you can opt out of prescreening, an option required by the Fair Credit Reporting Act (FCRA). Offers that stemmed from a credit check (No. 1 above) are required to include this notice. Offers that stemmed from other sources (No. 2 above) are not.

Here’s the prescreen opt-out notice on a recent offer that landed in my mailbox:

Prescreen opt out notice

Am I really going to get the card?

When you apply for a card, the issuer will perform a hard credit pull, which will temporarily dock your credit score. So credit card mailings are often regarded with some suspicion. After all, what if you apply only to get turned down?

What many consumers don’t know, Haney says, is that offers that stem from a credit check (ie, prescreened offers) must contain a firm offer of credit. That’s required by the FCRA, which seeks to balance the modest invasion of consumers’ privacy (which occurs when an issuer asks the bureaus to check their credit) with a tangible benefit (a firm credit offer).

Here’s the wording in the FCRA:

Fair Credit Reporting Act firm offer of credit

And here’s what “firm offer of credit” means for you: Remember those criteria the issuer sent to the credit bureau when it asked for help in finding desired consumers? When you apply, if you still meet those criteria, the issuer can’t rescind the offer.

The key phrase, though, is, “if you still meet those criteria.” That may no longer be the case if you let the offer sit for a while.

“The offer gets mailed out, it arrives in the mailbox and it might sit on the kitchen table for a month before the person responds,” Haney says. “So the consumer sends back a response, and the bank will pull a credit report to verify that nothing has changed.”

If you fail to meet the original criteria the issuer presented to the credit bureau, it can turn you down. For example, say the issuer asked the bureaus for a list of people who have no accounts that are 60 or more days late. If you’ve since become 60 days delinquent on another card, you can get turned down.

The good news: If you still meet the original criteria (and apply by the deadline in the offer letter), the issuer has to honor the offer. It still has a little wiggle room, though. Credit card offers sometimes contain ranges of APRs. When you apply for the card, that credit check will determine which one you get. And it might be higher than what you’d hoped.

“They do mention that in the fine print of the offer, and you’ll often see phrases like ‘depending on creditworthiness,’” Hronek says.

As for the invitations to apply, those never involved a credit check, so the issuer can turn you down for any reason. In fact, Haney says, most people who respond to invitations to apply are turned down. First of all, there was no creditworthiness check before the offer was extended, so large numbers of people getting the offer aren’t qualified. Second, those with credit problems are more likely to apply for new credit – because they need it.

“The more desperate they are, the more likely they are to respond and the more likely they are to have a negative credit history,” Haney says. “That’s been a well-established phenomenon in the banking world for a very long time.”credit card mailed offers

Why am I getting so many offers?

Despite the sheer number of credit card offer mailings, the number of people who respond is tiny – both Haney and Hronek estimate 1 percent or less.

“Ninety-nine percent of people get the offer and throw it in the trash, and the last that’s ever heard of them,” Haney says.

So issuers are always trying to find consumers who are not only creditworthy, but who are also likely to respond to offers. That can be difficult because, as Haney says, “usually, people with the best risk scores respond the worst, and people with the worst risk scores respond the best.”

If you’re getting mailboxes full of offers, you may be in that “sweet spot” between having good enough credit and being likely to apply for a new card.

That’s a very, very small portion of the population,” Haney says. “So the people who get preapproved offers tend to get a lot of them.”

Life events may also be a trigger for more offers. If an issuer is targeting new home owners, and a mortgage just appeared on your credit reports, that could explain why you’ve suddenly become so popular.

Of course these complex selection processes can have humorous results – you may have heard the stories of babies and dogs getting preapproved for cards.

“Pets and children sometimes do get preapproved offers,” Haney says. “The systems are not perfect, and the challenge of consolidating data from thousands of sources is far more complex than people realize. It happens very rarely, but garners lots of attention when it does.”

How do I make them stop

Perhaps you consider credit card offers junk mail. Perhaps you worry about identity theft (although both Haney and Hronek point out that no sensitive information, like Social Security numbers, are included on credit card offers). Or maybe you just don’t want issuers checking your credit. Whatever your reasons, you can opt out of offers – or certain types, anyway.

There’s not much you can do about invitations to apply. But you can stop offers of the prescreened variety. Just go to, and fill out the necessary forms to prevent the credit bureaus from including you on the lists they provide issuers.

“This was offered to give consumers the option of preventing issuers from looking into their credit files,” Hronek says. “So that’s a way to cut down on those mailings if you like.”

Updated Oct. 20, 2014

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Why was my credit card declined?

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A few months ago, I’d just taken my brand-new travel rewards card out of its envelope. Eager to make a dent in the spending requirement for the sign-up bonus, and to get double rewards on travel, I made my first purchase – nearly $1,600 worth of tickets on Singapore Airlines.

After entering my card details and clicking “purchase,” I received a message saying my card had been declined. I had to call my bank and confirm my identity before I got my tickets.

A similar thing might have happened to you – either while shopping online or, worse, at the checkout counter. Here’s why your card might be declined – and how to minimize the chances of getting shut down.

Why was my card rejected?

Your credit card may have been rejected because you’ve maxed it out or gone delinquent. If neither is the case, it’s could just be your bank looking out for you. In its efforts to continuously watch for fraud on your accounts, it might block legitimate purchases. card declined

That may be inconvenient, but it turns out many consumers don’t get too upset about false alarms. A June 2014 survey from asked consumers how they’d feel if a legitimate purchase were blocked because of suspected fraud – 28 said they’d feel “unbothered,” 25 percent said they’d be “annoyed,” 22 percent responded they’d be “relieved,” 9 percent said they’d be “embarrassed,” and just 8 percent said they’d feel “angry.”

Besides, a false alarm is better than fraud escaping notice.

“It’s all a balance between convenience and security, both for the benefit of the bank and the benefit of the customer,” says Doug Johnson, vice president of risk management policy at the American Bankers Association. “The bank is always looking at whether it has enough information to potentially inconvenience a customer because a transaction may not be normal for them. But frankly, the greatest inconvenience for a customer is when they’re inconvenienced by fraud on their account.”

If a bank suspects fraud, your card won’t necessarily be shut down completely, and you might be able to use it for other purchases. In some cases, a suspicious purchase (fraudulent or legitimate) may even be allowed to go through, and the bank will call you later to check on it. In either scenario, if the purchases turn out to be fraudulent, you can then discuss replacing your card.

What trips the wire?

That depends on the cardholder.

“What the bank is doing is continually evaluating transaction behavior,” Johnson says. “It’s essentially building the case for whether a transaction has higher levels of risk than a transaction the customer is normally doing.”

While you may have heard a lot of stories about purchases getting blocked abroad, foreign travel won’t always raise a red flag with your bank.

“They would never, for instance, flag travel for me,” Johnson says, adding jokingly, “It would be more likely that they’d say, ‘You’ve been home for three days. This is suspicious.’ It’s all very specific to the transaction behavior associated with the customer.”

That might help explain why my plane ticket purchase was blocked. The bank barely knew me, and there I was, buying tickets on a foreign airline.

“For some reason, thieves like to buy travel with other peoples’ cards,” Johnson says.

So should you be worried that, if you use your credit card all over the world for a variety of purchases, your issuer won’t even notice fraud? Johnson points out that banks’ algorithms are incredibly sophisticated, and often surprisingly so. For example, his bank once flagged some purchases of jewelry and motorcycle parts on one of his very active cards.

“I was sad to some degree because it was suggesting I wasn’t manly enough to buy motorcycle parts or that I wouldn’t give jewelry to my significant other,” he says. “It’s very interesting how sophisticated the analytics behind these things can be.”

How to prevent card shut-downs

You can’t predict what your issuer’s fraud algorithm will flag, but there are a few simple measures to take to lessen the chance a purchase gets rejected.

  • Tell the bank about your travel plans. Call in advance and tell the bank if you’re going abroad – or across the country. The point is to give your bank a heads up that “a purchase could be happening in a geographic location your cad is generally not used,” Johnson says. “And that could be in the United States, too, not just international travel.” Your bank will add your travel dates and destinations to your file.
  • Consider giving your bank a heads up about a major purchase. It can’t hurt to let your bank know if you’re making a major purchase — like expensive jewelry or electronics — with your card.
  • Make travel purchases from home. If you’re buying train tickets for half way across the world, try to buy them from a home computer, so that a strange IP address doesn’t spook your bank.

A new twist

Visa’s trying a new method of blocking fraudulent purchases (or at least making things more inconvenient for card-cloners), and you may experience it at the gas pump. pump at Shell gas station

Visa Transaction Advisor (VTA) allows each gas station owner to choose a risk threshold (on a scale from 01 to 99). When someone swipes a card at the pump, Visa runs a less-than-1-millisecond analysis of hundreds elements to determine the risk score. If it falls over the station’s chosen comfort zone, the display screen tells the cardholder to see the attendant inside. Legitimate consumers will likely do so. Fraudsters, who are likely trying to test out a counterfeit card at an unattended pump, will probably flee, says Mark Nelsen, vice president of risk products and business intelligence for Visa.

“We’ve had this out in the market for six months,” Nelsen says. “We’ve been analyzing those consumers who were triggered for high risk, and it does appear that the criminals are leaving. Genuine consumers are likely to go inside.”

Flagged transactions result in a notification to the merchant as well as the issuing bank, so it can confirm the transaction with the cardholder.

VTA went through a pilot test at 300 stations in January and February 2014 and has now rolled out at 25,000 stations. Don’t expect to get sent inside to complete many of your fuel purchases, though.

“In terms of overall population, less than one-tenth of 1 percent of transactions would actually ever hit the risk threshold,” Nelsen says. “So it’s a very small portion of the highest-risk transactions that would get trigged for that high risk alert.”

So what triggers that alert? There are 500 elements factored into the risk score, culled from fraud activity reports from around the world and assembled to create “a profile of fraud and what it looks like,” Nelsen says. Location could be a factor, as could purchase amount and whether the card was involved in a data compromise. If a station is in an area plagued by fraud, it can set the risk threshold lower, thus possibly catching more transactions in the net.

Gas stations were a logical place to start with VTA, Nelsen says, because they’re unattended and more expensive to upgrade to EMV. But Nelsen says Visa is looking for new environments.

“E-commerce is one environment, as well as kiosks,” he says. “There are kiosks now that are selling some really expensive items.”

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