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The safest kind of credit card for making payments

Credit Cards » The Safest Kind Of Credit Card For Making Payments

The traditional mag-stripe card
The traditional mag-stripe card © bibiphoto/Shutterstock.com

The traditional mag-stripe card

The card with the magnetic stripe on the back is the most common type in U.S. wallets. Called a mag-stripe card for short, the card's key to its security efforts are on that stripe.

The stripe contains up to three tracks and holds all the information that is physically found on the card, such as your name, card number and expiration date. The first and second tracks consist of basic account information to complete a transaction. The third track is rarely used, but when it is, it can include a personal identification number, country code or authorized amount.

All the information on the stripe is encrypted, but only once. That means it stays encrypted the same way for every transaction. Randy Vanderhoof, executive director of the Smart Card Alliance, calls it "static" data because it never changes. That makes it easier for fraudsters to pick up the information from the magnetic stripe using a device called a skimmer and to create a counterfeit card with that information.

Skimmers can be placed over ATMs or payment terminals and collect the information on the magnetic stripes. Or, fraudsters posing as waiters can swipe your card through handheld skimmers.

It's not all doom and gloom. Card issuers have created sophisticated counter-fraud systems that track your transactions and will deny purchases that don't fit with your spending patterns. The three- or four-digit CVC code also protects against online fraud.

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