Ways to beat ID fraud with a prepaid card

September 26th, 2011 | Posted in Credit Card Debt

Over the last few months, the number of stories you read about or watch on the news relating to fraudulent behaviour and activity seems to have increased, especially identity fraud. Just the other day, there was an article online about how a pensioner was hit with nearly 10,000 of credit card fraud each on his Barclaycard. Bob, from Exeter, was appalled when he discovered that a fraudster had spent 9,200 on his credit card in a single day! The criminal had made 16 successful transactions of between 500 and 750, all at Apple stores across Bristol by pretending to be Bob and gaining access to his personal details and PIN number.

This story is not unheard of lately as criminals and charlatans are becoming even more cunning than before to try and get their hands on your cash. There are straightforward things you can do to put off thieves. One of the easiest things you can do is cease all paper statements being sent to your home address. Smart fraudsters are able to recognise certain pieces of mail such as credit card statements and bills so they can use your details for fraudulent activity. If your bank does not offer this service, then you should think about purchasing a prepaid card.

Prepaid cards work just like credit and debit cards but you have to load the card with funds first before you can use it. When you purchase a prepaid card, there are no paper statements so you avoid the risk of identity theft or invasion of privacy. One of the most important ways you can be safe is to think about simple account management, this means tracking your balance and transactions instantly online, by telephone or via SMS which you are able to do with prepaid cards.

Other ways fraudsters can attack is by cloning your card. They can use a simple machine that copies the magnetic strip on your card and then are able to make an identical copy as they have all the information they need to start using your card. This is a very common type of fraudulent activity, particularly if you are on holiday as most places abroad, such as hotels and restaurants will swipe your card using the magnetic strip as opposed to asking you to enter your PIN.

So what happens if someone does manage to steal your account details whilst you are on holiday and starts spending your cash? Pretty much nothing! The only thing that you are able to do is cancel all your cards as the chances are all your credit and debit cards will be linked to one or two accounts. A helpful tool that you should think about, particularly if you are going on holiday is to invest in a prepaid credit card as there are no links to any bank accounts with these types of cards so you can travel safely knowing that the chances of you becoming a target for criminals is fairly low.

One key way of making sure you are not the target of identity fraud is to keep a regular eye on your credit file paying close attention on any applications made for cards, loans or bank accounts in your name. If your credit rating has been shattered by fraudsters, then there are simple, yet long term, steps you can take in order to rebuild your credit. Look out on comparisons websites for credit building prepaid credit cards. These types of prepaid cards are great as they gradually strengthen your credit file over time.

This author is a consumer services researcher, specializing in bank cards and personal finance. He recommends downloading a free 36 page guide called the ‘Essential Guide To Your Money‘. For more information, go to the prepaid credit card website.