In this digital age, identity theft is a growing problem. In 2021, the Federal Trade Commission received almost 400,000 reports for credit card fraud, a type of identity theft that is divided into two distinct categories: new accounts and existing accounts. The first type, also known as application fraud, is when someone steals your credentials and uses them to open up new credit card accounts in your name. Existing account fraud occurs when the criminal steals information for credit cards that you already own.
Both types of credit card fraud are a hassle to resolve, but it will likely take longer in the case of application fraud because the potential for damage is much greater. It’s possible that the bad actor who has your sensitive personal information will use it to open not just one but multiple credit card accounts.
If you’re dealing with existing account fraud, the problem can usually be resolved by notifying your credit card issuer of the fraudulent charges and requesting their removal, called a chargeback, from your account. But shutting down new account fraud can be a different beast entirely. It will require persistence and some know-how, but it can be done. “It can seem like a daunting process, but there are people that are going to help you along the way,” says Allison Murphy, senior director of U.S. card fraud prevention and detection at Capital One.
If you’re a victim of new account credit card fraud, take these steps to reclaim your finances and your life.
1. Determine if you’re a victim
New account credit card fraud often first announces itself when you get a bill with charges you never made. However, you can detect fraud earlier by regularly checking your credit report. AnnualCreditReport.com offers free credit reports every week until Dec. 31, 2023; after that, annually. Once you receive it, look for accounts that you didn’t open yourself.
You can also sign up for credit monitoring with all three credit bureaus, Equifax, Experian and TransUnion. That service alerts you when certain changes are made to your credit report, such as the addition of new accounts or when a hard inquiry is made into your credit.
If you find evidence of new account fraud, it makes sense to comb through all of your legitimate accounts to see if they’ve also been compromised. Check your checking, savings, credit and HSA accounts, and verify that all charges are valid. Keep organized by designating a folder for all fraud-related documentation such as billing statements, signed contracts, emails, screenshots, letters you’ve written and letters from the credit card and credit bureau companies.
Then, as a precautionary measure, change the passwords for any financial accounts that you have access to. “You want to lock down those passwords to ensure that those same bad actors can’t access your information through the same door that they just used,” Murphy says.
2. Contact the credit card’s fraud department
Call the credit card’s fraud department and explain that you’re a victim. Request that any fraudulent accounts that you didn’t authorize be closed and the charges erased so that you’re not responsible for the bill. You’ll probably need to speak to the issuers again after filing an Identity Theft Report with the Federal Trade Commission, so keep the issuer’s contact information for future reference. Eva Velasquez, president and CEO of the Identity Theft Resource Center, advises that you should “follow each issuer’s steps, keep a log of who you talked to, when and what you’ve done.”
If you’re feeling embarrassed about identifying yourself as a victim, remember that the fraud departments exist to help you in precisely these situations. “We want to make you whole, and we have ways to get those accounts closed and clean up your accounts,” Murphy says.
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Shutting down new account fraud will require persistence and some know-how, but it can be done.
3. Contact the three national credit bureaus
Freeze your credit
To prevent the criminals from opening any more accounts with your information, place a security freeze with all three credit reporting companies. When a freeze has been installed on your credit report, no one can open new accounts in your name. If you need to give creditors access to your credit report — you’re applying for a mortgage, for example — you’ll contact the three credit bureaus again to unfreeze your credit for a select time period of your choosing. You can permanently unfreeze your credit, but doing so eliminates a major protection against future fraud.
Place a fraud alert on your credit report
As an extra safeguard, you can also add a fraud alert to your credit report. If lenders see a fraud alert attached to your credit file, they must contact you in order to verify your identity to ensure that the person requesting credit is, in fact, you.
Fraud alerts last for one year but can be renewed after they expire. Victims of identity theft can get an extended fraud alert that lasts seven years, but you need to have an identity theft report to qualify.
And you only have to contact one of the credit reporting agencies for a fraud alert: each company is required to notify the other two on your behalf.
4. Get the government involved
File a report with the Federal Trade Commission
File an Identity Theft Report at www.identitytheft.gov or by calling 877-438-4338. This document is critical as it creates an official record of the fraud, which entitles you to certain rights given to identity theft victims. You’ll need to save the Identity Theft Report, since issuers will likely ask for a copy. After receiving the report, the FTC will also generate a personalized recovery plan for you.
File a police report
File a complaint with your local police or sheriff’s department. You may need a copy of the Identity Theft Report you filed with the FTC and proof of your identity, such as a passport. The police report has a few uses. According to Axton Betz-Hamilton, author of “The Less People Know About Us,” a memoir about her experience with familial identity theft, “Creditors will often request the police report as proof that you are a victim of identity theft.” Velasquez added that some credit card issuers will require a police report before they remove fraudulent charges from the account.
5. Contact the issuers and credit bureaus, again
Be persistent about removing fraudulent charges
Maybe the credit card companies were reluctant to close the fraudulent accounts and are still sending you billing statements. Once you have a copy of the Identity Theft Report you filed with the FTC, contact the issuer’s fraud department again and repeat your request.
Once closed, have each issuer send you a letter confirming that the fraudulent accounts were closed and that you are not responsible for the charges. Store this letter with the other documentation related to the identity theft.
Block fraudulent debt from your credit report
Unpaid debt that identity thieves rack up in your name may appear as a derogatory mark on your credit report, compromising your ability to access credit. However, you can ask the credit bureaus to remove, or block, fraudulent debts from your report.
Blocking requests must be made in writing and must include a copy of your FTC Identity Theft Report, proof of identity and a list of fraudulent debts on your credit report. If the block is successful, creditors may not turn debt that was a product of identity theft over to a collections agency.
6. Don’t pay any fraudulent debt
When billing statements flood your mailbox and interest charges cause the debt to swell, it may be tempting to start paying off the debt while you reach a resolution with the issuers. However, Velasquez and Betz-Hamilton generally advise against doing so, saying that paying the debt legitimizes it.
“Once you start paying on that debt, you’ve said, ‘It’s mine’,” Velasquez says. “You’ve taken legal responsibility for it. It’s extremely hard to walk that back.”
If you aren’t making headway with the issuers, you can hire an attorney or get free legal help through organizations like Legal Aid. The Identity Theft Resource Center also provides free assistance to victims of identity fraud.
“This is a really complicated space, and no one should be ashamed of needing help and advice,” Velasquez says.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Keith Srakocic, File
There’s no such thing as a universal best credit card. The right card for you depends on your lifestyle, your goals and your credit history. For instance, if you’re looking for travel rewards but your friend is building credit, the best card for each of you will differ greatly.
And while there may not be one best card for you — the average American has about three cards, according to a 2021 Experian study — there are many times a card can be wrong for a specific situation.
Here are eight times you could be using the wrong credit card, and what you can do instead.
AP Photo/Keith Srakocic, File
There’s no such thing as a universal best credit card. The right card for you depends on your lifestyle, your goals and your credit history. For instance, if you’re looking for travel rewards but your friend is building credit, the best card for each of you will differ greatly.
And while there may not be one best card for you — the average American has about three cards, according to a 2021 Experian study — there are many times a card can be wrong for a specific situation.
Here are eight times you could be using the wrong credit card, and what you can do instead.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Mark Lennihan, File
You may have started out by building your credit with a secured card, student card or alternative card, but once your credit is in better shape, it may be time to upgrade.
If you’ve used a starter card responsibly by keeping your utilization rate low and paying balances in full every month, you may qualify for a card that’s a better fit now. A different card could offer a higher credit limit, better rewards earnings and perks like cellphone protection and travel benefits. Some card issuers may automatically upgrade your card once you’ve reached certain thresholds, while others may not. Contact the issuer to check your options.
AP Photo/Mark Lennihan, File
You may have started out by building your credit with a secured card, student card or alternative card, but once your credit is in better shape, it may be time to upgrade.
If you’ve used a starter card responsibly by keeping your utilization rate low and paying balances in full every month, you may qualify for a card that’s a better fit now. A different card could offer a higher credit limit, better rewards earnings and perks like cellphone protection and travel benefits. Some card issuers may automatically upgrade your card once you’ve reached certain thresholds, while others may not. Contact the issuer to check your options.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Jenny Kane, File
New cardholders can often earn a lucrative welcome bonus but usually with a caveat: You have to spend a minimum amount within a specific time frame to get it. Note the spending requirements for a card’s sign-up bonus, and use the new credit card enough by the deadline. If you continue to pay with an older credit card that’s already in your wallet, you risk missing out on the bonus if you don’t spend enough on your new card.
A little planning can help. Think about upcoming big purchases you need to make, such as a car repair or a new laptop. Just one of those could be enough to hit the bonus’s spending requirements.
AP Photo/Jenny Kane, File
New cardholders can often earn a lucrative welcome bonus but usually with a caveat: You have to spend a minimum amount within a specific time frame to get it. Note the spending requirements for a card’s sign-up bonus, and use the new credit card enough by the deadline. If you continue to pay with an older credit card that’s already in your wallet, you risk missing out on the bonus if you don’t spend enough on your new card.
A little planning can help. Think about upcoming big purchases you need to make, such as a car repair or a new laptop. Just one of those could be enough to hit the bonus’s spending requirements.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Paul Sakuma
It’s true a store credit card can save you money, especially if you are a frequent, heavy spender at that store. However, the rewards earned with a store credit card are often only redeemable at that store, limiting their usefulness.
Most shoppers would be better off using a general rewards credit card and earning more flexible rewards. Some cards have elevated rates for online shopping purchases, while others earn as much as 5% back at popular merchants like Target, Walmart and Amazon.
AP Photo/Paul Sakuma
It’s true a store credit card can save you money, especially if you are a frequent, heavy spender at that store. However, the rewards earned with a store credit card are often only redeemable at that store, limiting their usefulness.
Most shoppers would be better off using a general rewards credit card and earning more flexible rewards. Some cards have elevated rates for online shopping purchases, while others earn as much as 5% back at popular merchants like Target, Walmart and Amazon.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Elise Amendola, File
Several cards boast a top 5% cash-back rate in popular spending categories like grocery stores, restaurants and gas. The catch, though, is that you’ll have to do some work to earn that rate. In most cases, you’ll need to track categories: Qualifying 5% purchases may rotate quarterly, or you may have to choose your own categories. If you’re spending outside of those categories with this card, you’ll likely earn a paltry 1% instead of the juicy 5% you think you’re earning.
Most times, you’ll have to activate the bonus categories before the issuer’s deadline to earn the 5%, even if you’re spending in the right category. Plus, you’ll likely run into spending caps in those 5% bonus categories; once you hit those caps, the rewards rate drops to 1%. For those who find a 5% card to be high maintenance, opt for one that earns a flat 2% cash back on every purchase instead.
AP Photo/Elise Amendola, File
Several cards boast a top 5% cash-back rate in popular spending categories like grocery stores, restaurants and gas. The catch, though, is that you’ll have to do some work to earn that rate. In most cases, you’ll need to track categories: Qualifying 5% purchases may rotate quarterly, or you may have to choose your own categories. If you’re spending outside of those categories with this card, you’ll likely earn a paltry 1% instead of the juicy 5% you think you’re earning.
Most times, you’ll have to activate the bonus categories before the issuer’s deadline to earn the 5%, even if you’re spending in the right category. Plus, you’ll likely run into spending caps in those 5% bonus categories; once you hit those caps, the rewards rate drops to 1%. For those who find a 5% card to be high maintenance, opt for one that earns a flat 2% cash back on every purchase instead.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Jenny Kane, File
According to a 2020 NerdWallet study, 14% of Americans view credit cards as “complicated,” and it’s not hard to see why. Some issuers offer suites of cards in the same family and have names that are nearly identical. The logos of some issuers are strikingly similar, too. Perform a quick audit of your credit cards to make sure that they are the cards you intended to get. Cards that look and sound nearly the same may be worlds apart in terms of fees and rewards structure.
AP Photo/Jenny Kane, File
According to a 2020 NerdWallet study, 14% of Americans view credit cards as “complicated,” and it’s not hard to see why. Some issuers offer suites of cards in the same family and have names that are nearly identical. The logos of some issuers are strikingly similar, too. Perform a quick audit of your credit cards to make sure that they are the cards you intended to get. Cards that look and sound nearly the same may be worlds apart in terms of fees and rewards structure.
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Victim of credit card fraud? 6 actions to take now
AP Photo/David Goldman, File
Balance transfer cards can be excellent tools for paying off debt. They consolidate several debts into one place, making them easier to keep up with, and they can give you a breather on interest for many months. However, if you’re using a balance transfer card for everyday expenses as well, it will be hard to whittle that balance to $0. Plus, many balance transfer cards don’t come with rewards. Leave the balance transfer card at home but take the cash-back card with you — and be sure to make regular payments toward both.
AP Photo/David Goldman, File
Balance transfer cards can be excellent tools for paying off debt. They consolidate several debts into one place, making them easier to keep up with, and they can give you a breather on interest for many months. However, if you’re using a balance transfer card for everyday expenses as well, it will be hard to whittle that balance to $0. Plus, many balance transfer cards don’t come with rewards. Leave the balance transfer card at home but take the cash-back card with you — and be sure to make regular payments toward both.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Richard Drew, File
It pays to know the rewards rates for all of your credit cards. Say you have two credit cards, one that earns 4% on gas and another that earns only 1%. Using the 4% card whenever you fill up would return $30 more if you spent $1,000 annually on gas. That $30 may not seem like a lot, but small amounts add up, especially if you have multiple rewards credit cards. To help keep track of different rewards rates, you could label your cards with sticky notes or keep a small reference guide in your wallet.
Often you’ll have to keep spending caps in mind, too. Issuers typically cap earnings on their highest rewards rates after you reach a certain amount of spending in a particular category. Make sure you track your progress toward that cap and switch to another card with a better rate when you reach it — until the limit resets.
AP Photo/Richard Drew, File
It pays to know the rewards rates for all of your credit cards. Say you have two credit cards, one that earns 4% on gas and another that earns only 1%. Using the 4% card whenever you fill up would return $30 more if you spent $1,000 annually on gas. That $30 may not seem like a lot, but small amounts add up, especially if you have multiple rewards credit cards. To help keep track of different rewards rates, you could label your cards with sticky notes or keep a small reference guide in your wallet.
Often you’ll have to keep spending caps in mind, too. Issuers typically cap earnings on their highest rewards rates after you reach a certain amount of spending in a particular category. Make sure you track your progress toward that cap and switch to another card with a better rate when you reach it — until the limit resets.
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Victim of credit card fraud? 6 actions to take now
AP Photo/Matt Rourke
Though they may look and feel virtually the same, a debit card is very different from a credit card. Credit cards offer protections and perks that debit cards (and cash) do not. You can earn cash back and other rewards with credit cards that you won’t get with debit, and it’s often easier to recover from losing a credit card than a wallet full of cash. More importantly, responsible credit card use builds your credit score, which can translate into more favorable loan terms and insurance rates, among other money-saving benefits.
AP Photo/Matt Rourke
Though they may look and feel virtually the same, a debit card is very different from a credit card. Credit cards offer protections and perks that debit cards (and cash) do not. You can earn cash back and other rewards with credit cards that you won’t get with debit, and it’s often easier to recover from losing a credit card than a wallet full of cash. More importantly, responsible credit card use builds your credit score, which can translate into more favorable loan terms and insurance rates, among other money-saving benefits.
