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Received a Chip Card? Here's What You Should Know

Have you received a new credit or debit card recently? Did you notice a metallic chip on the front? These chip cards are replacing cards with only magnetic strips. These cards will help reduce fraud by generating a unique code needed for approval for each transaction. The code is only good for that transaction. Payment information is encrypted in the chip.

Merchants have been upgrading their card readers to accept the new chip cards. As of October 1, 2015, if a merchant hasn't upgraded their card reader then they pay when fraud occurs instead of the card issuers. Expect to see upgraded card readers at gas stations and ATM machines over the next two years.

Consumers will see the impact at the checkout. A chip-ready card reader typically won't accept a swipe of a chip card so you'll need to insert the chip end of the card into a slot in the card reader. Signing or in some cases entering a PIN will complete the transaction. Chip-ready card readers will still be able to read the magnetic strip of cards that don't have a chip.

The changeover to chip cards requires more than a billion credit cards to be reissued. Scammers are taking advantage of this by contacting people by email and posing as their card issuer. The email states that in order to get a new card, they either need to confirm their account details by providing some personal information or click a link to complete the process. Don't do either. Contact your card issuer using the phone number on the back of your card.

Card issuers will continue to send out these updated cards through 2016. If you haven't received an updated card yet, you can call the number on the back of your card to check when you are scheduled or to request the new card.

Even though chip cards will help protect against fraud at point-of-sale terminals, they won't help protect against data breaches and "card not present" fraud such as online fraud. Always remain vigilant, no matter how much security is improved.

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