5 myths about credit cards in today’s world

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Credit cards have made life easier. You don't have to carry cash if you have a credit card. Offers and discounts entice people towards credit cards, called plastic money. While credit cards have disadvantages as well as advantages, there are some myths surrounding credit cards that you should be aware of.

The signature on the back

Most people believe that the signature at the back of the credit card has no significance. But that is not true. Whenever you swipe the credit card, the merchant is supposed to match the signature on the back of the card with the signature that you make on the receipt (NO LONGER SIGNED – PLEASE CHECK IF RELEVANT). If there is a fraud, you can always ask the card company to match the signature and save yourself from paying for the fraudulent transaction.

Hacking a credit card

If you think that your credit card cannot be hacked, thing again. Basically, all the data on your credit card lies on its magnetic strips. The moment you swipe your credit card, this data is extracted for verification. It is possible to take this data and create a duplicate card.

CVV number

You may believe that if you keep your CVV number private, your credit card is safe. Wrong. When you use your credit card for online transactions, many portals do not ask for the CVV number at all! Online transactions can be made with just the name of the card holder, the card number, and the expiry date.

Security

If nobody knows the password of your credit card, then your card is safe from any sort of fraud. This conviction is right, but only to a certain extent. If you transact on a foreign website, many times, adding the final PIN is not compulsory. Hence, fraudsters could use your credit card if they know your password (THIS WHOLE THING MAKES NO SENSE – THE PREMISE IS NOBODY KNOWS YOUR PASSWORD).

Closing card for reduction in the bill

Many people think that if they will close the card, they will not have to pay their outstanding bills, or their outstanding amount will be reduced. This is not how it works – until you pay the whole amount, no credit card company will close your card.

These are some of the myths about credit cards. While this plastic money provides benefits, it is somewhat risky too. You need to be careful.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.

Some Common Misconceptions about Credit Cards