There are many different security measures in places depending on which type of payment method is used. Credit cards and debit cards have a lot of similarities, but the use of a personal identification number, or PIN, does vary. With these various types of protection that are in place, your finances are guarded by your financial institution.
Credit cards do have PINs, but they are not always needed to complete a transaction. In many instances, a security code is used rather than the PIN. Whether or not a PIN is needed comes down to a few different factors. Let's take a look at the ins and outs of a credit card PIN.
There are some situations where it's going to be absolutely necessary to have a PIN for your credit card, and some other times where you won't need it at all. We're going to take a look at just what might affect the need for a PIN and more information about the chip and PIN on your credit card.
What Is A Credit Card PIN?
While most people are familiar with using a PIN for their debit card, what is a credit card PIN? Just like with a debit card, a PIN for a credit card is a four-digit code that is used as a verification that you are authorized to use the card. It is one of many different protections against fraud that your financial institution has in place.
Your card issuer may have assigned the PIN that you use with your credit card, otherwise, you may need to choose your PIN upon activation of your card once you receive it in the mail. Even if your card has a pre-assigned PIN, you may be able to change it to a number of your choosing.
One of the biggest reasons that card issuers now suggest using a PIN is that it makes it even more difficult for thieves and hackers to crack your unique four-digit code. Forging a signature can be pretty easy, but there are so many combinations of numbers, that guessing a PIN can be pretty hard.
Chip And PIN Credit Cards
First introduced in Europe in 1993, Chip and PIN cards are now fairly standard across the world. These cards are named after the three major global credit cards: Europay, Mastercard, and Visa (EMV). The main reasons these cards were developed is as a way to reduce skimming cybercrimes, as well as credit card theft during point-of-sale transactions.
While many cards still have a magnetic strip, new cards have a chip embedded in them. Rather than being prompted to swipe your card to complete a transaction, we are now asked to insert our credit and debit cards into the chip reader. There are even instances where you can tap to pay with your card, with no need to swipe or insert at all.
How Chip And PIN Cards Work
The standard way to pay with a credit card for years was to swipe your card, but these days, cards have a small metallic chip that holds all of your payment data. These chips provide a unique code each time you make a transaction, which helps to prevent fraud. These codes are unique to each purchase, which makes it increasingly difficult for thieves to use your payment information.
Are Chip And PIN Credit Cards Safe?
If you're looking for a secure way to make payments, a Chip and PIN card is one of the safest ways to do so. They are significantly more secure than the traditional magnetic strip style of credit card for a couple of different reasons. The main thing that makes these so much safer is that each transaction that is initiated has a unique encrypted code that is generated. This is especially helpful in preventing credit card fraud because your actual credit card number remains a secret. Because it stays concealed, thieves have a much harder time obtaining enough information to accurately steal your card information. Anything they can get is essentially useless.
No matter what type of credit card you use, the Fair Credit Billing Act (FCBA) does provide some protection for you. Under this act, there is a $50 limit in total liability for fraudulent activity with your physical card, and $0 for any fraudulent activity with just your credit card number. Most of the credit card companies offer protection on top of that, with zero fraud liability policies, meaning you will not be held liable for any fraudulent transactions, no matter how much they may have been for.
With fraud protections in place, if you check your statement and notice purchases that you didn't make, you just need to contact your card issuer to report the fraudulent activity. Once they have the report, they will be able to remove any fraudulent activity from your account. From there, they will begin an investigation so they can find out who stole your card information. You will also receive a brand new card in the mail, as well as a new account number.
When Are Credit Card PINs Used?
When you head to your local supermarket or big box store, chances are that once you swipe or insert your credit card, you won't need to use the PIN to complete the transaction, but there are some circumstances in which a PIN is necessary to make a purchase. If you decide to take out a cash advance at an ATM, you will probably need to enter your identification number.
Credit card standards when traveling abroad can vary from country to country, so quite often you will need to enter your PIN when using your card. This is more common when purchasing at a kiosk in a train station that is unmanned, as well as in other specific scenarios.
The standard procedure for transactions in Europe is that the card is inserted into the chip reader and then the PIN is entered to verify your identity. You may have the option to pass on entering your PIN, but if you do this you will need to sign to complete the transaction. Signing rather than using your PIN is not always an option, especially in a situation where you are traveling by train and the kiosks don't have an attendant available.
Do You Need A PIN For A Credit Card
No, not all credit cards require a PIN. However, if you have a chip and PIN card, a PIN is needed. If you want an added layer of security, a PIN is a smart thing to have. It is quite likely that, instead of providing your PIN, you will need to provide a signature or the three-digit security code from the back of your card.
When making purchases in the United States, you won't always need to use a PIN. Most of the time, you will insert your card into the chip reader, the machine will scan your payment information, and the transaction will either be approved or declined, depending on your financial situation. Sometimes you will need to provide a signature, but it isn't always required.
If your card allows for cash advances at an ATM, you will need a PIN. Additionally, you will need your personal identification number when making purchases abroad. The good news is that obtaining a PIN for your credit card is a fairly simple process.
How To Get A Credit Card PIN
If you require a PIN, the easiest way to establish one is by contacting your card issuer. In many cases, a PIN will be assigned automatically when you sign up for your credit card. If this is the case, you will get the PIN in the mail with your new card. For security reasons, it's always a good idea to contact your card issuer to set up a new PIN in order to help prevent fraud.
Sometimes, you will just get your card in the mail and you will need to either call the card issuer or use your online banking portal or app to activate the card and have a PIN set up. Usually, you can choose your PIN.
Choosing A Secure PIN For Your Credit Card
Just like passwords for various online accounts, it's important to choose your PIN wisely. To reduce the likelihood of someone guessing your PIN, there are some ways to choose a number that is secure and less likely to be guessed. Some of the best tips to avoid a PIN that is easy to figure out include:
- Do not use birthdays or anniversaries
- Pick numbers that aren't going to be easy to guess (I.E. do not use your favorite athlete's jersey number)
- Make sure to set different PINs for your different cards and accounts
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While a PIN isn't always necessary when making purchases within the United States, most credit cards that are issued do have a personal identification number assigned to them. PINs are needed if you are using your card to get a cash advance from an ATM, as well as when making transactions in foreign countries. The good news is that obtaining a PIN for your credit card is as simple as contacting your card issuer and requesting a PIN.
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Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.