Scenes of crowded malls and stores likely won’t come to fruition this year, as more Americans than ever will accomplish their holiday shopping online.
More than 7 in 10 holiday shoppers are planning to make most of their purchases online this year, up significantly from 51% last year, according to a new report from Bankrate.
Despite its convenience, online shopping also brings a unique set of security risks for people who could become victims of financial crimes like fraud, identity theft, or data breaches. The report found that over 9 in 10 U.S. adults have put their personal data at risk.
“With holiday shopping moving more online this year because of the coronavirus pandemic, it is imperative that consumers protect their personal data,” Ted Rossman, Bankrate’s credit card analyst told Cashay.
Conceding that it’s unrealistic to follow every guideline perfectly, Rossman said to be mindful of the “big stuff” like using a credit card over a debit card, freezing your credit, checking your statements, and more to protect yourself from holiday hackers this season.
Here’s his advice.
1. Shop with a credit card over a debit card, if you can
If you’re comfortable using credit and can pay off your balance in full every month to avoid interest, it’s “much safer to use a credit card online, rather than a debit card,” Rossman said.
Shop with your lender’s money before shopping with your own, Rossman said, adding that “credit cards have much better fraud protections than debit cards” in the event your transaction gets hacked.
Unlike a credit card, a debit card is linked to a checking account, meaning that money is unavailable to an account holder for as long as a month while a bank works to resolve the dispute. A fraudulent charge made with a credit card is much easier to dispute and the cardholder isn’t liable to pay for purchases, nor is it reported to a credit bureau.
2. Freeze your credit
Freezing credit after suspected fraudulent activity or a lost card is usually one of the first levers people pull to secure their finances, but Rossman considered it worthwhile to quickly freeze credit with the three major credit bureaus—Equifax, Experian, and TransUnion— before anything hinky happens.
A credit freeze has nothing to do with your existing credit; it means that lenders won’t be able to issue any more credit to you or someone impersonating you.
It’s so effective at safeguarding your credit that it locks you out, too, so Rossman explained that users must remember to lift it temporarily if applying for a car loan or credit card.
3. Create transaction alerts
Monthly transaction statements are good, but being on top of each transaction in real-time is even better to spot suspicious activity.
Depending on your bank or creditor, Rossman said it’s “worthwhile” to set up automated spending alerts like texts or push notifications every time there's a charge or a single charge exceeds $100 — or less, depending on your risk tolerance.
4. Use a password manager
Remembering user names and passwords is tedious, which is why 80% of U.S. adults have reused online passwords, according to Bankrate.
Rossman encourages the use of password managers like LastPass or Dashlane and to use diverse passwords rather than the same password for multiple accounts. That way, a hacker will have a harder time breaking into many of your other accounts if he or she gets ahold of one your old passwords.
5. Shop only secured sites
When shopping from a new site, Rossman encourages people to research for the sake of their personal and financial security.
Glance at the URL and “look for that HTTPS, the S meaning secure,” he said when shopping an unfamiliar site. And the same rules apply for shopping online as they do in-person, so “if it totally looks like a scam, you should probably just avoid it,” he said.
6. Consider a virtual credit card number
To really keep your credit card number out of hackers’ hands, Rossman suggested using a virtual credit card that conceals your true credit card number.
Available through creditors like Citibank, Capital One, and Apple Card, he says it’s “basically a disposable card number you can sign up with your card company. They'll give you a new temporary 16-digit number and expiration date” to use for your online transaction.
The advantage is that fraud does occur, your actual credit card number hasn’t been compromised so cardholders can avoid the hassle of requesting a new card and resetting auto payments.
Read more information and tips in our Spending section