Credit Card Myths

Here's a piece from MSN Money listing nine credit card myths. Number three caught my attention:

Myth No. 3: Merchants may require identification, such as a driver's license, when you pay with a credit card.

Merchants' agreements with Visa, MasterCard, American Express and Discover specifically forbid them from requiring identification. Your signature is supposed to be enough.

Furthermore, merchants' contracts with Visa and MasterCard are supposed to prevent them from even asking for ID. American Express and Discover don't prohibit asking but strongly discourage it.

Merchants typically ask for ID because they're trying to reduce their own fraud costs. But if a clerk memorizes or writes down vital information from your driver's license -- your address or date of birth, for example -- you're the one who could be at greater risk of identity theft.

We discussed this issue here a couple months ago. People had mixed opinions on whether or not it was a good idea for stores to do this, whether or not they minded, and whether or not it was even legal given the credit card companies' policies. Now at least the last issue is settled -- it's not acceptable as part of the agreements.

Myth #4 also was worth considering since it's related to #3:

Myth No. 4: You can deter identity theft by writing "Ask for ID" instead of your signature on the back.

See above. You'll certain deter use of your card, because merchants aren't supposed to accept one that's not signed on the back, and that could affect you as much as any thief.

I always sign my cards -- like they can read the signature anyway. ;-)

And finally, a myth all FMF readers know is false:

Myth No. 9: Rewards cards are pretty much the same.

This myth takes different forms, including "the best rebate you can get is about 1%" or "you have to pay an annual fee to get a rewards card" or "the rewards aren't worth the effort to redeem."

Ha! We know you can do MUCH better than 1% on a rewards card, huh? ;-)

Comments

[Kevin]

Interesting re: #3 - there is one mall we frequent that almost every store asks for ID when I pay with my credit card. I'm guessing they have a higher % of credit card fraud there, but I'll have to try this next time they ask. The less my vital info is in the public eye, the better as far as I'm concerned.

[Brad]

Found this to be the best of both worlds:

Sign your Credit Card and also write "Please Check ID"

[Benjamin]

I found "Myth No. 6: If you pay your credit cards in full and on time, you don't need to worry about your cards' effect on your scores." to be an interesting fact I didn't know. I actually pay my AMEX Blue off each week, so I rarely get a statement about $1000, which is a small percentage of my limit.

Ben