To reduce identity fraud risks, you may consider paying cash whenever possible for your purchases. There are times when using a credit card is mandatory and beneficial, but other times, paying cash for some purchases may be even more rewarding as we will discuss.
From an identity theft prevention standpoint, paying cash is the best method of payment. Carrying cash instead of your credit cards is safer because if you lose your cash money, you don’t have to worry about your personal information falling into someone else’s hands because cash is anonymous. Replacing lost cash money is also somewhat easier than replacing other types of payments like credit cards and checks except when you decide to carry a huge amount of cash which is also not advisable. That said, it is prudent to carry the right amount of cash for your trips and paying cash whenever possible.
We mentioned that paying with credit cards has many benefits which may make sense to use once in a while with a proper payment strategy. For example, purchases made with credit cards sometimes offer liability protection for damages, loss and theft of the purchased merchandise. Some credit cards also offer rebates, points, and other travel benefits which may be worth the inherent risk that credit card use presents. In addition, when paying with credit cards, consider merchants which use secure payment systems. Consider paying cash if you suspect that a merchant may be less than diligent in its system and operation security when handling your personal information. For example, theft of credit card information in restaurants is somewhat high in the US. If you travel to Europe, you will notice that restaurant waiters process your credit card transactions in your presence with their little credit card processing machines. This process is implemented to make sure that waiters don’t steal customer credit card information in a restaurant back rooms.
Another risk of not paying cash whenever possible is that some consumers pay with their debit card whenever they are asked in the stores whether they want to use their cards as credit or debit. Although debit card transactions are protected, credit cards offer a better protection against identity theft and fraud. Other risks of using debit cards for purchases is that your account may be charged with overdraft fees and account balances may be withdrawn leaving your accounts empty in case you become a victim of debit card fraud. You should also not forget that when you use debit card for purchases, you also share your Personal Identification Number or PIN which is just an additional piece of information that you can avoid using if you pay cash for your purchases.
Our purchasing habits include frequent small items which don’t make sense to be purchased using credit cards. Such items include daily coffee drinks and refills which costs as little fifty cents. If you use your credit cards for all the small items that you purchase on a daily basis, you just increase your risk of identity theft because you share your card information with yet another merchant each time. And if you use your debit card, well, you share your card information and PIN which if stolen can be used to withdraw cash from your account. One of the best payment methods for small and frequent purchases is using gift cards. Just like cash, if you lose the gift card, you only lose the available credit balance on the gift card and not your personal information which can cost you even more. That said, the key is to keep small credit balances on the gift cards and add more money when needed so that your cash loss is limited in case you lose the gift cards.