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How to Avoid Credit Card Fraud and Scams

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Credit cards are convenient ways to make purchases, but they’re not perfect. Credit card scams are everywhere, and credit card fraud is a growing problem. Read on for answers to common questions about spotting and reporting credit card fraud.

What is credit card fraud?

Credit card fraud is when someone uses your credit cards without your permission. They might use it to make purchases or withdraw funds. Credit card fraud can happen when someone steals your physical credit card. It can also happen if your credit card data is stolen and used online.

Another form of credit card fraud involves identity theft. This can occur when someone uses your personal information to open a credit card in your name. For example, a thief could use your Social Security number to apply for a credit card without your knowledge. More than 270,000 cases of credit card fraud occurred in 2019 alone.

What is a credit card scam?

A credit card scam is a lie or trick used to get your credit card information. It can be as simple as a phone call from someone pretending to be your card issuer. There are also more complex scams that involve fake web pages designed to look like your issuer’s login page.

Credit card scams are extremely common. They can happen in person, by phone, through an email, or even via social media.

How do credit card companies spot fraud?

Credit card companies have developed extremely sophisticated tools for detecting fraud. They monitor every transaction on every card. Then, credit card issuers use complicated computer algorithms to look for unusual transactions. For example, if you rarely leave your city and your card is used in another state, your card issuer might flag your card for possible fraud.

Depending on the company, flagged transactions can have a variety of results. Some issuers will send text messages or automated phone calls. This allows you to confirm whether it’s you making the purchase — or not.

In some cases, the purchase might be denied, especially if the credit card company is unable to contact you. This could happen if your card account is used in another country, for instance. The transaction might also be denied if you try to make a purchase with a website known for fraudulent activity.

How to spot credit card fraud

Although cardholders don’t have the fancy algorithms that card companies use, you can still spot fraud. The simplest way to catch credit card fraud is to keep a vigilant eye on your accounts.

Check your transactions at least once a month. If you spot a purchase you didn’t make, dispute the charge right away. Of course, you should also report a lost or stolen card as soon as possible.

Don’t forget to regularly check your credit report for signs of credit card fraud. You are entitled to a free report from each of the three credit bureaus every year. Immediately report any accounts you didn’t open yourself.

How does fraud happen on credit cards?

Fraud can occur when thieves get either your credit card data or your physical credit card. For example, credit card fraud happens when criminals acquire your credit card information or your account login information.

Common ways fraudsters get your credit card information include theft and scams. For example, a thief may steal your mail or get old documents from your trash. Your physical credit card can be stolen. Your card can also be copied via a skimmer or scanner. Thankfully, chip credit cards have reduced the amount of fraud from copied credit cards.

Phone scams are also common. Fraudsters may pretend to be a bank or government agent and demand your account data. Other scams can include complex fronts like fake charities or counterfeit businesses.

Another common type of credit card fraud happens when your identity is stolen. Identity thieves can use your personal information to open credit cards in your name. They can then rack up debt on the cards and disappear.

How do I report credit card fraud?

The process for reporting credit card fraud depends on the type of fraud. If you spot fraudulent purchases on your card, you can report them to your issuer. You can easily report credit card fraud to your card issuer through its website or mobile app. Of course, you can also call the number on the back of your card.

If the credit card fraud involves unauthorized accounts opened in your name, there are two steps you need to take. First, contact the card issuer and alert them to the fraudulent account. You can usually do this online or by phone.

Next, contact the credit bureaus and report the credit card fraud by disputing the account. You’ll need to file an account dispute with each credit bureau — Equifax, Experian, and TransUnion. Identity theft should also be reported to appropriate legal authorities, including the Federal Trade Commission (FTC). Check identitytheft.gov for help reporting identity theft.

What to do if you’re the victim of credit card fraud

The exact steps to take if you’re a credit card fraud victim can vary.

If your card is stolen and used fraudulently, report the theft to your issuer. You should also freeze your credit. Make sure you dispute unauthorized transactions, too. Your issuer will send you a replacement card, likely with a new number.

Even if it’s just your credit card data that was stolen (not the physical card), immediately dispute any transactions on your card you did not make. Consider freezing the credit card until the issue is resolved. Your issuer may decide to replace your card and give you a new number.

If a thief has obtained your login credentials, report the fraud to the card issuer right away. You should also change your account password and username. Be sure to change your credentials for any other accounts that use the same username or password.

In all these cases, remember that your liability for fraudulent credit card purchases is limited. Many card issuers have $0 liability policies in place.

If a credit card is opened in your name without permission, it gets more complicated. This means you are the victim of full-scale identity theft. You’ll need to report the credit card fraud to the card issuer. You should also file a dispute with each of the three credit bureaus.

Lastly, report the identity theft to any required authorities. This can include filing a police report and contacting the FTC or the Social Security Administration. If you’re not sure where to start, try identitytheft.gov for more information.

Although your liability is limited, identity theft can be hard to prove. Unfortunately, your credit score may suffer in the process. You may need to take steps to increase your credit score while you work to resolve your identity theft. It can be frustrating to have your credit damaged through no fault of your own, but there are steps you can take. Credit cards for bad credit can be useful if you have trouble getting approved for a new card after identity theft. Check out our guide for more on how to rebuild your credit.

Common credit card scams

There are as many different credit card scams as there are scammers (if not more). But most common scams fit into a few main categories:

  • Phishing: These are email scams that include links to fake login pages. The email will claim there’s an issue with your account or pretend to be a fraud alert. When you use the email link, you are taken to a counterfeit website that may look very real. When you use your login credentials on the fake site, the fraudster gets access. Never log into your credit card account through an email link. Instead, go directly to the issuer’s website through your address bar or search engine.
  • Impersonation: These scams often occur by phone but may also be by email. Fraudsters pretend to be your bank, a government agency, or even law enforcement. They may use fear or threats to coerce you into giving up your information. Remember that no legitimate agency or bank will ask for your credit card login credentials by phone or email.
  • Fake organization: Some scammers will pretend to be part of a charity or popular organization. They may ask for donations or try to sell you something that doesn’t exist. When you give them your credit card information, they can use it to make fraudulent purchases. Avoid giving out your card data by phone or email.
  • Get rich quick: This common type of scam will offer quick cash or free credit card rewards — they just need your personal and/or card information. Always be wary of anyone who asks for your Social Security number or other personal info. If it seems too good to be true, it probably is.

Of course, these are just a few of the most common types of credit card scams. Always use caution before giving out your personal or credit card information.

How to report credit card scams

Credit card scams and card fraud are crimes. If you fall victim to a credit card scam, you can report it to your local government — specifically, your state consumer protection office. You can also report scams to the FTC at the federal level. This is particularly important if the scammer is impersonating a government entity.

If you lost money or possessions to a credit card scam, you can also file a police report. Contact your local police department to file a report.

What to do if you’re the victim of a credit card scam

As soon as you know you’ve been scammed, report it. Dispute any fraudulent credit card transactions with your issuer. You can do this online or by phone. Next, report the scam to the local government authorities. You may also want to file a police report with your local law enforcement. Watch your credit reports and pay attention to activity on all your accounts to catch any additional fraud. You might also consider setting up a fraud alert or credit freeze.

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What is a Subprime Mortgage?

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What is a subprime mortgage? If you’re asking this question, chances are good you’re either trying to borrow for a home with poor credit or you’ve been offered a loan you’re concerned is a subprime loan. We’ll explain the answer to the question “what is a subprime mortgage?” and discuss some of the risks and alternatives.

What is a subprime mortgage?

Prime loans usually offer competitive interest rates to well-qualified borrowers. A subprime mortgage is similar to a conventional mortgage, except it has a higher interest rate. Subprime loans are geared toward borrowers with bad credit who can’t qualify for a prime mortgage at the best rates. Lenders take a bigger risk with subprime loans, so they charge substantially higher rates due to the borrower’s poor credit history.

If you have a credit score below 620, you may not be able to qualify for a prime mortgage, but you might get a subprime mortgage.

Types of subprime mortgages

There are multiple types of subprime mortgage loans. However, one particular type of loan — an adjustable-rate mortgage — is especially common for subprime mortgages.

Adjustable-rate mortgages

Many subprime mortgages are adjustable-rate mortgages, or ARMs. The introductory rate on an ARM is fixed for a limited time. For example, a 5/1 ARM provides a fixed rate for five years. After that, the rate adjusts based on a financial index.

That means your interest rate may go down — but it could go up, too. ARMs carry more risk than fixed rate loans. If interest rates rise, monthly payments could increase. If you take out an adjustable loan, find out how high your payment could go. Don’t assume you’ll always be able to refinance or sell your home before it adjusts.

Fixed-rate mortgages

With fixed-rate subprime mortgages, the interest rate remains the same for the entire repayment period. Since the rate doesn’t change, payments don’t change.

The important question is, what is a subprime mortgage interest rate you’d qualify for? You need to make sure the rate is reasonable and that monthly payments are affordable.

Shop and compare rates from multiple mortgage lenders for poor credit to find the best subprime loan rates. And use a mortgage calculator to see how much your monthly payment would be for any loan you’re considering.

Interest-only mortgages

Interest-only mortgages allow you to pay only interest for a limited time, such as the first five years. This makes monthly payments more affordable, but you don’t make progress in reducing your loan principal.

At the end of the initial period, you’ll begin paying both principal and interest. Your payments may rise substantially because you’ll have a shorter timeline to pay your loan off. If you took a 30-year mortgage and only paid interest for the first 10 years, you’d have just 20 years to pay off your entire principal balance.

Most interest-only loans are also structured as ARMs, so you take the added risk of rates going up and payments rising.

Dignity mortgages

Dignity mortgages are a specific type of subprime loan offered by some lenders. With this type of mortgage, you’ll initially have a high interest rate. But if you make on-time payments for a period of time, your interest rate will eventually be reduced to the prime rate.

Subprime mortgage risks

It’s important to also consider if you’re willing to take on the risk of this type of loan. Some of the biggest risks include:

  • Interest costs will be high: You will pay significantly more mortgage interest over time than if you took out a conventional mortgage.
  • Finding a lender may be difficult: Not all mortgage lenders offer loans to subprime borrowers. You could be limiting your potential loan options.
  • Payments could increase: If you choose an ARM, you face the risk of interest rates going up and payments rising.
  • Foreclosure is possible: If you don’t pay your subprime mortgage loan, your lender will foreclose. Your credit could be severely damaged.

Lenders are required under Dodd-Frank financial reform laws to conduct an “ability-to-repay” assessment. This ensures borrowers are capable of paying back their loans. These mandates can reduce the risk for borrowers. But the bottom line is buying a house with bad credit can create a host of complications.

Alternatives to subprime mortgages

You may be wondering if there are other options. The good news is that there are multiple solutions for borrowers with bad credit. Some of the best options include these government-back loans:

  • FHA loan: FHA lenders often work with borrowers with lower credit. FHA loans are available to borrowers with credit as low as 500 as long as they make a 10% down payment. Borrowers with scores of 580 or higher can get approved with a 3.5% down payment.
  • VA loan: A VA mortgage loan is available to eligible service members and veterans regardless of their poor credit history. The VA doesn’t set a minimum score, but some lenders do.

USDA loan: These allow you to purchase eligible homes in rural areas. More stringent underwriting is required to qualify borrowers with credit scores below 640. But it may still be possible to qualify.

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Indigo Platinum Mastercard Review | NextAdvisor with TIME

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We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

Indigo® Platinum Mastercard®

Indigo® Platinum Mastercard®

  • Intro bonus: No current offer
  • Annual fee: $0 – $99
  • Regular APR: 24.90%
  • Recommended credit score: 300-670 (Bad to Fair)

The Indigo Platinum Mastercard can help you build a better credit score (if you practice good credit habits) with monthly reporting to the three credit bureaus. Unlike many other options for building credit, this is an unsecured credit card, so it doesn’t require a cash deposit as collateral. But you may incur an annual fee, depending on your creditworthiness when you apply.

At a Glance

  • Monthly payment reporting to the three credit bureaus for people with limited credit history or poor credit
  • Annual fee of $0, $59, or $75 the first year, depending on your creditworthiness ($75 version charges a $99 annual fee after the first year)
  • Unsecured credit card with no security deposit required
  • Standard variable APR of 24.9% 

Pros

  • Available to individuals with no credit history or low credit scores

  • Unsecured credit card

  • Annual fee could be as low as $0 depending on your creditworthiness

  • Monthly payments report to all three credit bureaus

Cons

  • No rewards

  • Annual fees vary depending on creditworthiness, and you won’t know your fee until you apply

  • High variable APR

  • $300 credit limit

Additional Card Details

The Indigo Platinum Mastercard is geared toward people with “less than perfect credit” or minimal credit histories. Like other credit-building card options, it doesn’t offer a lot of perks.

You will get a few benefits, like online account access and reporting to all three credit bureaus (Equifax, Experian, and TransUnion). You can also choose from multiple card designs for no extra charge.

Prequalification is another benefit of the Indigo Platinum Mastercard. Prequalifying is a great way to gauge your approval odds and the terms of your offer without filling out a full application and undergoing a credit check, which can temporarily hurt your credit score. If you do choose to apply after pre-qualifying, you’ll still be subject to credit approval with a hard credit inquiry.

Should You Get this Card?

Many credit cards available to people with bad credit scores are secured credit cards that require a cash deposit as collateral. The Indigo Platinum Mastercard offers an alternative to secured cards for building better credit, but has its own drawbacks.

For one, your credit limit is capped at $300. If you’re approved for a version of this card with an annual fee, it’ll be automatically applied, which means your starting limit could be as low as $225. 

The annual fee itself is another drawback. The amount you’re charged will depend on your creditworthiness when you apply. If your approval comes with an annual fee, that $59 or $99 ($75 the first year) charge can quickly add up over time. Consider other cards with no annual fee (and even no annual fee secured credit cards) that may make better long-term options for building a healthier credit profile.

How to Use the Indigo Platinum Mastercard

Because the Indigo Platinum Mastercard doesn’t offer any rewards and your credit limit is just $300, you should use this credit card for the sole purpose of improving your credit score. Only make purchases you can afford to pay off when your statement is due, and pay your bill on time to avoid up to $40 in late fees and a penalty APR up to 29.9%. 

Pro Tip

Building a great credit score, whether you’re starting from no credit history or repairing damaged credit, requires a foundation of good credit habits your credit card can help establish — such as timely payments, low credit utilization, and paying off your balances in full each month.

The Indigo Platinum Mastercard’s low credit limit means you’ll need to be extra careful with your spending to improve your credit score. Using more than 30% of your available credit can hurt your credit utilization rate — one of the most influential factors in your credit score. With a credit limit of $300, that means you should keep your charges below $90.

The goal of a card like Indigo Platinum Mastercard is to, over time, improve your credit score enough to qualify for a better credit card. Use this card to establish and maintain the healthy credit habits (like timely payments in full, low utilization, and consistently paying down balances) that will improve your credit long-term, and help you qualify for a card that’s better suited for your spending habits in the future.

Indigo Platinum Mastercard Compared to Other Cards

Indigo® Platinum Mastercard®

Indigo® Platinum Mastercard®

  • Intro bonus:

    No current offer

  • Annual fee:

    $0 – $99

  • Regular APR:

    24.90%

  • Recommended credit:

    300-670 (Bad to Fair)

  • Learn moreexterna link icon at our partner’s secure site
Citi® Secured Mastercard®

Citi® Secured Mastercard®

  • Intro bonus:

    No current offer

  • Annual fee:

    $0

  • Regular APR:

    22.49% (Variable)

  • Recommended credit:

    (No Credit History)

  • Learn moreexterna link icon at our partner’s secure site
Capital One QuicksilverOne Cash Rewards Credit Card

Capital One QuicksilverOne Cash Rewards Credit Card

  • Intro bonus:

    No current offer

  • Annual fee:

    $39

  • Regular APR:

    26.99% (Variable)

  • Recommended credit:

    (No Credit History)

  • Learn moreexterna link icon at our partner’s secure site

Bottom Line

EDITORIAL INDEPENDENCE

As with all of our credit card reviews, our analysis is not influenced by any partnerships or advertising relationships.

If your credit score isn’t great and you want to start building the credit foundation to move in the right direction, the Indigo Platinum Mastercard can help by reporting your usage to the three credit bureaus — if you practice good habits that will reflect positively on your report. But you may also take on a pricey annual fee and risk high utilization due to the card’s low credit limit. Before applying, consider other cards for bad credit and secured credit cards with no annual fee that may better serve your credit-building goals.

Frequently Asked Questions

The Indigo Platinum Mastercard is a decent option for consumers with poor credit who don’t want to put down a security deposit on a secured credit card. Check your prequalification terms, and compare other options for people with fair credit or bad credit before applying.

The credit limit for the Indigo Platinum Mastercard is $300. If you get approved for a version with an annual fee, your annual fee will be deducted from your credit limit.

The Indigo Platinum Mastercard is an unsecured credit card, so you do not have to put down a cash deposit as collateral.

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Akron community supports council recommendations on police reform

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Doug Livingston
 
| Akron Beacon Journal

Critics on either side of the police reform debate see promise in what Akron City Council has done.

The union representing officers “can work with” the eight recommendations in council’s 22-page report on Reimagining Public Safety, which was released publicly this week.

The head of the Akron NAACP is applauding the time and consideration council committed to do “something that definitely needed done.”

And the Rev. Greg Harrison, a retired Akron detective a regular critic of local lawmakers who fail to understand the inner working of the city’s police force, praised council members for allowing officers to educate them on policing in Akron before putting together “substantial” and “solid” recommendations.

“I am very surprised, because really I did not think that the council was going to come up with such substantial recommendations,” said Harrison. “I am surprised, but I’m happy. I think the recommendations, if implemented, put us light years ahead of what any task force can come up with.”

Eleven of the 13 City Council members present Monday afternoon unanimously supported a resolution adopting the recommendations. But that’s all they are, at this point: recommendations to work with the next police chief, the mayor and community partners to craft legislation after collecting public input.

And some of these recommendations have been recommended before.

The first — to give the city’s independent police auditor enough staff and resources to do his job — has been sought by the community since the position was created in the early 2000s. It was a priority in a 2011 report by the Police Executive Research Forum, an independent firm of law enforcement experts who dived into policing in Akron when leaders kicked around the idea of reforms more than a decade ago.

“I want to applaud them for taking the time to do what they did,” Judith Hill, president of the Akron NAACP said after looking over the recommendations. “I think it was important and it was something that definitely needed to be done.

“And I know this is the beginning of a process,” she continued, “but I don’t see anything that sets aside funding to support changes.”

Some recommendations, like crisis intervention training to all officers, identify limited funding as a barrier.

On that, Fraternal Order of Police Lodge No. 7 President Clay Cozart agrees with some of the loudest advocates for change.

“It’s going to require more officers. It’s going to require more training. And it’s going to require more funding, and that’s probably the most difficult issue to tackle,” Cozart said.

He added that he found it “disingenuous” that council, though reaching out to him Sunday, waited until 10 minutes before the recommendations went public on Monday to share them with him.

General approval of the eight recommendations, which can be viewed at https://bit.ly/3piHNyc, was not without some concern. The Beacon Journal sought but received no comment from Police Cheif Ken Ball, who is retiring in February, or Maj. Michael Caprez. 

Cozart said ramping up foot and bike patrols is fine, as long as an officer in danger isn’t left high and dry because backup is walking to get there.

Harrison paused when he got to language about hiring. Candidates are screened and questioned on their bad credit reports and drug offenses, which could be minor and nonviolent. This interview process, which involves a lie detector test, determines whether they get hired.

“They have absolute control of recommending or not recommending them,” Harrison said of sergeants doing the background investigations of potential cadets. “When they say it’s an honesty issue, that’s a judgement call. And when you’re talking about implicit biases, a lot of those biases come into play.”

Hill said she and members of her community have a strong interest in some citizen oversight committee. Council, instead, recommended strengthening the police auditor’s position, which Hill said she was something sought “across the board” in the community.

Now, she said, lawmakers need to find ways, in conjunction with the mayor and Akron police and community partners, to fund these recommendations and benchmark progress by collecting data today “to see how changes are affecting policies and procedure” after implementation.

“I was pleased to see all of the progress our city is making both in structure and inclusive thinking to better benefit Akron citizens and help our police department both reflect and serve the community more effectively,” added Bree Chambers, president of Akron Minority Council. The group of youth-led social justice advocates handed the mayor and council a list of police reforms in July, including a “great many” of that are “outlined or alluded to” in council’s recommendations.

As council works to legislate the recommendations, University of Akron Sociology and Anthropology Department Chair Rebecca Erickson has been asked to host virtual town hall meetings with residents in every city ward. Faculty and students will facilitate the conversations generated by the recommendations. Erickson said police officers will join the discussion by the end of the spring semester as a community survey solicits broader feedback.

Council President Margo Sommerville said that since council announced the special committee on Reimagining Public Safety in July, the public has asked when they would get the chance to speak on the topic of policing and community relations.

“Maybe there’s something that we missed that needs to be addressed,” Sommerville said. “So, we want to give the public that opportunity to do that. We’re really excited about this partnership and collaboration with the University of Akron because that too is something that we have not tapped into enough.”

Prior to approving the recommendations, council members thanked police officers and command staff who educated the special committee’s four working groups. It was enlightening, they said.

“We are probably far more advanced than many police agencies in terms of incorporating social services in to the police work that we do,” said Councilwoman Linda Omobien, the director of clinical services at Community Support Services.

“The Akron Police Department liaisons showed that this is an institution that has led the way on many of these issues, like on Crisis Intervention Team training. At the same time, they really showed that they want to keep moving forward,” said Councilman Shammas Malik, who was regarded by colleagues on council as critical to the success of a fact-finding, deliberative process that spanned five months and 22 meetings.

“It would not have been possible if not for him,” Sommerville said.

Malik credited Sommerville’s leadership as the driving force in “something that council hasn’t done before.”

“When we talk about building equitable policing, when we talk about improving community trust with law enforcement, here are ideas that I think we can all get behind,” Malik said. “Getting community input through the University of Akron is going to be important.”

Councilman Russ Neal said the process council started in September to better understand policing is a model for understanding and legislating solutions to other complex problems like housing high utility costs in the city. Neal asked council to consider more staff to help them dive deeply into other issues.

Along with involvement, Cozart said the union supports legislation that is grounded by facts. The process led to “more enlightenment and education on both sides,” he said.

“Change has to occur,” Hill said. “And it’s going to be a win-win for everyone once we get through the process.”

Reach reporter Doug Livingston at [email protected] or 330-996-3792.

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