This is National Fire Prevention Week, and you may have noticed helpful reminders in the media on simple things we can do to prevent fires or mitigate their damage. On the heels of this annual event, we also have the end of Daylight Savings Time in early November; serving as a reminder to check fire extinguishers and smoke detectors. I recommend that you add one more important task: Check your credit cards and credit reports.

Why is this important? As with the risk of fire, when fraud happens, it happens quickly! The more prepared you are, the quicker you can respond and minimize the damage. Notice I say “when” fraud happens. Unfortunately, we are in a world now where credit cards are compromised routinely. The fraudsters have become very sophisticated. Just as our local fire departments have trained us for certain preventative measures, here are five simple steps that you can take twice per year to minimize or prevent fraud with your credit cards:

1. Inventory the credit cards in your wallet or purse. Are any missing? 
   
2. Take a moment to download at least one of your three free annual credit reports.
   The three credit reports are similar, so it doesn’t matter which report you decide to use. Remember you are legally permitted to receive one report free from each credit reporting agency (Experian, Equifax, or Transunion) each year. I recommend downloading one of the reports to your computer and change the file name to include the company name you decided to download, and the date. These can be long, arduous reports. However, the good news is that for today’s purpose, you are interested in simply reviewing your active revolving (credit card) accounts and other installment debt. This information will be towards the front of your report and typically on 1-2 pages.
   
3. Compare the open credit accounts on your credit report to the cards you have in your possession. Do they all match? If you spot one that you weren’t aware you even had – that’s a problem!
   
4. Do you have the login credentials for each account? Once you confirm this information, I recommend you login to each account’s website. Your goal is to make sure your contact information is correct. For example, you may have changed phone numbers or an e-mail address, and somehow never got around to updating the credit card account. If you haven’t already done so, I recommend setting up text messages so that if a fraudulent transaction is detected, you can be contacted immediately.
   
5. If you use LifeLock™ or other credit monitoring service, login and make sure the credit cards you have on file with them matches your currently used cards.

An example of fraud in real life

A neighbor of mine recently experienced an incident that perfectly illustrates the importance of these preventative measures:

While on vacation with his extended family, they visited a video arcade. Somewhere between the chaos and fun of the arcade, his credit card fell to the ground and ended up in the wrong hands. Early the next morning, he received a fraud alert. 

Lucky for him, he had just updated the contact information on the credit card website before he went on vacation. The fraud alert was asking him to confirm a sports betting transaction. Since he wasn’t a gambler, he responded accordingly. Turns out that the person(s) who found his card spent over $2,000 the previous evening. Because my neighbor was charging all other expenses to his room at the resort where he was staying, it would have been days before he discovered what had happen to his card, had he not received the fraud alert.

His story was a perfect illustration of how his up-front work to update his account information minimized the impact of the fraud. His credit card company removed all the fraudulent transactions. Other than the inconvenience of waiting for the new credit cards (and feeling a bit embarrassed at having lost the card in the first place) he was not harmed by the incident. The analogy of a fire to fraudulent activity seems appropriate, because with both, a little bit of work on the front end can prevent a much more serious situation.

Hopefully, these simple steps will now become part of your semi-annual routine.

Kristina Bolhouse, CPA/PFS, CFP®

Vice President/Shareholder

© 2022 Kristina Bolhouse and The Arkansas Financial Group, Inc., All rights reserved.

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