It’s the worst feeling in the world: you use your credit card and it’s declined. Not only that, you know you haven’t reached your limit or gone on any shopping sprees, so what gives?

These days thieves don’t wear masks and they don’t arrive on horseback totting guns; they do their dirty deeds from the comfort of their own home. Whether they steal your actual identity or they hack your credit card, all it takes is for one fraudulent charge to ruin your day.

Think your credit card has been hacked? We’ve compiled an easy list of tips that will help you recover and get back on track.  There’s a list of things you should do if you ever find yourself in this situation. We’ve compiled them into one easy list to help you out if you ever find yourself a victim of credit card hacking.

Worried that your identity theft has been stolen? We’ve got an article for that.

1. Yes, it’s serious, but don’t panic.

Don't Panic

Easy for us to say, but it’s the first step to getting through this. Oftentimes a simple mistake can be attributed for why you’ve reached your limit. A merchant might have double charged your card, or you might have forgotten about something you’ve purchased. If your spouse or a friend shares the same credit card account with you, they might have made a big purchase without notifying you. Investigate first; save the panic for later.

2. Call your bank and the credit reporting companies.

Phone Call

Call your bank and check for recent charges. Where were they made? What are their amounts? Can you contact those businesses? If you do determine that your credit card has been hacked, report it right away. You’ll need your account number, the date you noticed something was wrong, and the date and amount of your last purchase.

Then call one of the credit reporting agencies and place an initial fraud alert on your credit report. This service is free, and whichever bureau you choose must notify the other bureaus too. An initial fraud alert makes it difficult for thieves to open new accounts in your name because businesses have to verify your identity first.

Related article: Fraud Alerts and Credit Freezes

This would be a good time to order your credit reports. Not only are they free after an alert, you’ll be able to see any unauthorized charges or accounts and dispute them early on. The longer you wait, the greater your liability.

Finally, create an identity theft report with these tips from the FTC.

3. Send written notification to your creditors.

Mail Letter

Once you notify your creditors by phone be sure to send written notification too. It’s hard to prove a phone call, but easy to prove a certified letter, and that proof might come in handy. According to the Federal Trade Commission, how quickly you notify your creditors determines your amount of liability. Keep the following in mind as you work your way through the issue.

  • If you report a theft before any unauthorized charges are made, you won’t be liable for anything.
  • If you report within two business days after you learn about the loss or theft, your maximum penalty would be $50.
  • If you report your loss after two business days, but less than 60 days after your statement is sent to you, you’re maximum liability would be $500.
  • If the loss is reported more than 60 calendar days after your statement is sent to you, you could be liable for all the money taken from your ATM/Debit card, and possibly more.

4. Monitor your statements and correspondences.

Credit Card Statement

Monitor your statements closely over the next few months. If you need to report more fraudulent charges, you’ll need to make sure that you have accurate records of the dates and times you called for each issue. Any correspondences with your creditors, the credit reporting agencies, or any businesses you contact in regards to the fraud should be logged and dated.  Keep a copy of all documentation.

Sadly, credit fraud is on the rise.

In 2010, 7.0% of households in the United States, or about 8.6 million households, had at least one member age 12 or older who experienced one or more types of identity theft victimization. (Bureau of Justice Statistics)

Worse, if your wallet is stolen your bank’s contact information almost always disappears with it. For that reason we recommend you store that information in a secondary location. Time is of the essence when dealing with thieves and so you’ll want to make sure you have phone numbers handy if your credit card is hacked.

Don’t forget, there are a lot of options out there if you’d like to take steps to protect your financial information. Web sites like LifeLock and IdentyGuard, and apps like BillGuard will monitor your accounts and alert you if there is any suspicious activity.

Image: TheHackerNews

Credit Freeze

A security freeze, also known as a credit freeze, blocks third-party access to your credit. This “freeze” provides an extra layer of security against identity theft, protecting you, your money, and your credit. 

Credit freezes, however, only protect against a small percentage of identity theft attacks; they are certainly not free–unless you already are an identity theft victim–and can be a royal pain in the neck to thaw and refreeze, like when you actually need a creditor to check your credit without running into an ice wall.

As with most financial decisions, a credit freeze has its pros and cons. Here a few FAQs that will help you decide whether a credit freeze makes sense for you.

What is a credit freeze?

A credit freeze is a request you make to all three credit bureaus (TransUnion, Equifax and Experian) to block third parties from accessing your credit file. Once a credit freeze is in place, potential creditors who try to see your file will just see a message indicating your file is frozen.

How does a credit freeze work?

Credit Freeze

Most creditors require a credit inquiry, also known as a “hard pull” on your credit report before they will even consider doing business with you. Property owners, credit card companies, banks, certain utility providers, and employers use credit reports to screen new clients. This is usually seen as a nuisance because many hard inquiries into your credit file are known to affect your credit score.

The silver lining to credit inquiries is that without access to your credit report, most creditors will not give you the time of the day–let alone a line of credit. This, in turn, makes it difficult (if not impossible) for identity thieves to try to open new credit accounts in your name.

How do you place a security freeze?

Credit Freeze

The fastest way to place a security freeze on your credit file is to go to the websites of the three credit bureaus and file a credit- freeze request form. Only you can request a credit freeze on your file so you will need to provide personal information, such as your Social Security Number, date of birth, and both your current and former address to prove your identity.

The cost of adding a credit freeze ranges from $3–in Georgia, Montana and Nebraska–to $10, depending on which state you live in. The good news is that it’s free in all states to add, lift or remove a credit freeze if you’re a victim of identity theft and you have a police report to prove it.

How easy is it to lift or permanently remove a credit freeze?

Credit Card Security

Temporarily lifting or permanently removing a credit freeze is just a matter of contacting the credit bureaus, filing a request form and paying a $2 to $10 fee, if you live in a state that allows the charge. Certain states such as Virginia, Tennessee and North Carolina do not charge a fee.

The downside? Lifting or removing the freeze can take up to three business days to process and you generally can’t request it during non-business hours or on weekends. This means that requesting credit on short notice is a no-go–you’ll always need to plan ahead before filling out a credit application. Some see this waiting period as a way to safeguard against impulse buying and overspending, so it could be considered a bonus.

*If your business or employer requires regular credit checks that would have you constantly lifting and placing credit freezes, this method may not be practical for you.

What are the odds of credit fraud?

Fraud finder600x400

The chances you will be a victim of credit fraud are shockingly high. In 2013, an estimated 16.6 million people– 7 percent of U.S. households–were victims of some type of identity theft. If your household income is higher than $75,000 the odds you will fall prey to identity theft rise to 10 percent. Every year this costs Americans over $24 billion.

If you were one of the millions part of the data breach last year, check out 10 Steps to Take If You Shopped At Target.

Are credit freezes effective against credit fraud?

Credit Freeze

As mentioned, a credit freeze will make it difficult for identity thieves to open a new account in your name, but it will not stop them from using your current accounts. Unfortunately, according to the Bureau of Justice Statistics 2012 Victims of Identity Theft report, 85% of identity theft incidents involve the fraudulent use of existing account information, such as your credit card or bank account details. In these cases, credit freezes don’t help at all.

However, in 2012, 1.1 million consumers had their personal information used to open a new account. In their cases, a credit freeze would have probably shielded them from fraud.

A tool, but not complete protection.

Although credit freezes are not for everyone and they certainly don’t provide complete protection, they are a tool to consider when fighting identity theft, particularly if you rarely need a credit application or suspect your information has already been compromised.

Nevertheless, there are other arrows in your credit protection quiver you should also consider: An extended fraud alert, for instance, is always free and allows creditors to access your report as long as they verify your identity first.

Stay tuned for our follow up post on the ins and outs of an extended fraud alert.

This article was written by staff writer Andrew Latham. His mission is to help fight your evil debt blob and get your personal finances in tip top shape.
Photo: Credit.com, Daily Finance, Go Banking Rates