Use Virtual Account Numbers to Fight Fraud

Not many people realize that their credit card may offer a good type of fraud protection called Virtual Account Numbers. Virtual Account numbers are a one time use number that points back to your main credit card number. The main use of this is when buying things over the Internet. When you check out, you use a virtual card number which can only be used once. So not only are you not giving out your real credit card number, you are also giving out a number that can be used once for charges. Once the charge hits your credit card company, that same number can never be used again, except to issue a credit if you needed to return the item.

Many credit companies claim that you are not held liable for unauthorized charges to your account so many people don’t bother using Virtual Account Numbers. But if your card number was lost or stolen and you are issued a new number then you have to update that new number with every merchant that may have it stored. Using Virtual Account Numbers you can only give out your real credit card number to trusted merchants and give other not so trusted merchants a virtual account number. This way you have the security of knowing that even if someone did get that virtual account number they couldn’t do anything with it.

Some banks like Bank Of America have sophisticated virtual account number programs where you can get numbers that can be used multiple times for recurring purchases. Other banks like Citibank have a more basic program where you can get a number for a one time use.

I use a virtual account number for all my online purchases. With the way credit departments are getting hacked into, I think this provides me a little more security to not having my main credit card number exposed to possible fraud.

Here are the banks that I know of that have some type of Virtual Account Number feature:
Bank of America / FIA Card Services - ShopSafe Numbers
Citibank - Virtual Account Numbers
Discover - Secure Online Account Numbers

Banks I know that do not have some type of Virtual Account Number feature:
America Express (They used to have one but stopped it 2 years ago)
Chase
HSBC

Please leave a comment if you know of other banks that provide this valuable service.

Credit Cards For the Fairer Sex

Ladies, do you need a new credit card but am not sure where to turn? Well a new site as popped up called The Credit Room that is designed especially for you. With eye pleasing colors and an easier way of categorizing the cards, it is definitely worth a look. The site also explains some common credit card dangers to avoid. So it might be helpful to some of you out here.

In my opinion, when dealing with credit cards always remember the following:

• Never get a credit card with an annual fee
• Never pay a credit card sign up fee
• Always beware of the interest rate
• Keep an eye on Balance transfer fees if you choose to do a balance transfer
• Make sure to pay at least the minimum payment amount on time or you risk your interest rate increasing

Getting a credit card is easy these days, just make sure you fully understand the terms and conditions prior to signing up and using the card.

Increase That Ameican Express Credit Limit

Want to increase your credit limit on your American Express Cards? I came across the American Express’ Line of Credit Tool. This allows you to increase your credit limit on most of their cards.

So you might be asking, why do I want to do this? Well reasons to increase your credit limit include increasing your total available credit and therefore decreasing utilization which improves your overall credit score. If you were thinking of doing a balance transfer, this would allow you to utilize more money in that transfer. Plus having large credit lines showing on your credit report may induce other issuers into giving you higher lines as well, which may be useful to further lower your utilization.

I was able to increase my limit on my American Express Blue Cash Cardby $20,000 using this tool. Now I am not going to charge $20,000 more on this card, but now that my utilization is lower from the increase, it should move my credit score up. Plus it is cool to brag to my friends that my Amex Limit is $55,000!!!!

If you are going to use this, be cautious, don’t try to double your limit. My advice is to try to increase it by 40%-50% of your current available limit. If that works for you come back in a few months and try it again. Trying to request too much of a credit limit increase could cause your account to be flagged and then you may have to talk to someone in their Customer Service Dept and explain what you were doing, so don’t go nuts!

4.25% Auto Loans from Pentagon Federal Credit Union

Pentagon Federal Credit Union is offering 4.25% Auto Loans on new and used vehicles. The 4.25% rate covers loan terms from 12-72 months on a new vehicle loan and 12-60 months on a used vehicle loan. This is the lowest interest car loan I have seen thus far from a private lender. This is a good deal if you are buying foreign. If you are looking at an American car, you most likely can get 0% if you have good credit as American card dealers always seem to to have financing deals to help move their cars.

You must join Pentagon Federal Credit Union to take advantage of these rates. Signing up is easy. If you don’t fit in their field of membership then sign up to be a member of the National Military Family Association (NMFA). The cost is $20 to sign up and you don’t need to renew the membership every year to stay a member of the Credit Union. Not a bad way to get you in the door here.

I currently have a home equity loan (see review) with PenFed and am very pleased with their service. I have never done a car loan through them, however I can’t imagine that process being much different. I definitely recommend them as a lender.

Credit Card Balance Transfer Dangers

A reader Scott had written in with a very good question:  “Have you looked into the “scam” perpetrated by the cc co’s when they offer you a low-rate bal transfer, but also charge you interest on your purchases… so your true int rate can be much ore than that low “teaser rate” you were offered!”

Scott, you are exactly right. Lets not forget that the credit cards are in it to make money, so even though you think you are getting a great deal with a zero percent balance transfer there are always catches.

Here is how it works:

When you get a balance transfer any money you pay on your monthly statements pays the balance transfer first. So any purchases you make sit behind that balance transfer amount and earn interest at the purchases interest rate. Those purchases won’t start to get paid off until the total balance transfer is paid off.

One thing they do to attract you is to offer a zero percent balance transfer and then some sort of bonus after your first purchase. So you already have a purchase earning interest behind that balance transfer so that you could get the bonus. On the terms and conditions for the card, you will usually see something like this:

How do we apply your payments? We apply your payments to low APR balances first. You cannot pay off higher APR balances until you pay off lower APR balances. That means your savings from any promotional APR offer will be reduced if you make purchases or cash advances that have higher APRs.

My advice to you is that if you get a card with a zero or low percent balance transfer, do not use that card for purchases. Just cut up the card and when you get the statement just make the monthly minimum payments until the balance is paid off. Use a different card for purchases that way you can track exactly what is going on.

Another thing to beware of is the balance transfer fees. A few years ago most all cards offered no balance transfer fees. Now you are seeing the opposite, where most are offering a fee of 3% with a $5 minumum and no maximum (these fees vary among the different card providers). So be careful here since if you are balance transferring $10,000 you are going to get hit with a $300 fee immediately in this example. Always read the terms and conditions on the application. They must show you those fees there.

I hope this gives you a little insight into how the credit card companies make money on balance transfers. There are 0% balance transfer deals with zero fee deals out there, you just need to review the terms for each offer to make sure it is fee free as they are not going to make that info obvious to you. And be smart about it. Keep your balance transfers and purchases on seperate cards. That way you don’t have to try to figure out how you are being charged interest and fees.

Credit Monitoring Dilemma

After months of debate and looking at various products, I decided to move forward and purchase Equifax Credit Watch Gold 3-in-1 for my wife and I.

Yes there are ways to get your credit report free (see my post), but I haven’t been able to wait the 3 months to pull each report and want to know about inquiries to my credit report as they happen. With the recent increase in identity theft, I wanted more piece of mind that I know immediately when something hits my credit report.

With the Equifax Credit Watch Gold 3-in-1 we get unlimited access to our Equifax credit report for a year, a yearly 3 in one credit report which is a consolidated report from the 3 credit bureaus, but more importantly we now get real time email updates when a new account is opened. This was the main reason we went with Equifax. The email alerts are also configurable based on % change on an account or if a card is used that has been dormant for a while. Since I open quite a few credit cards to receive the bonuses, I want to make sure that no one has gotten the account info and has started going on a shopping spree.

Now this security isn’t free, I am going to end up paying $12.95 / month. This is why I was having the dilemma. I wanted to have these real time email alerts, but didn’t want to pay for them! But there was no way to do this for free, so I am just going to eat this cost for some piece of mind.  I feel that using this in addition to Yodlee (see my post) will virtually eliminate the risk of identity fraud for us, or at least give us an early warning so we can take care of it before it is too late.

If you don’t want to shell out $13 a month for something like this, at least regularly pull that credit report for free. I’ve seen too many horror stories happen to people that don’t keep an eye on their credit report.

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