The Question

Why Are Credit Card Chips Safer Than Magnetic Strips?

You know the drill by now. You step up to the cashier, push your purchases across the counter, and then slide your credit card through the reader. Then the machine beeps. "Do you have a chip?" the cashier says, even though you both know perfectly well that you do. "Right, right, I always forget," you say, then you shove your card into the slot. You wait, and wait, and wait, and then suddenly the machine freaks out — REMOVE YOUR CARD NOW! You grab it, and walk away with your head down, leaving everything you just bought behind you. There's got to be an easier way.

Why Strips Suck

Yeah, chips can sometimes seem like more trouble than they're worth. But there's a reason why pretty much every card that comes out these days has a chip in addition to the standard magnetic strip on the back, and it all comes down to protecting your personal data.

Maybe you remember a couple of years ago when credit card users (which is to say, everybody) were warned to be on the lookout for skimming. Skimmers can steal your bank account info — and a whole lot more — with a little device that looks pretty much identical to any old credit card reader. You just place the gizmo over the card slot at an ATM, gas pump, or pretty much anywhere else, and every time somebody uses it, they unknowingly hand their bank account data over to you. And they still have to pay for their gas.

You don't have to have slid your card through one of these devices to have your data stolen, either. Remember the 2013 Target hack? Though Ron Klein's magnetic strip was brilliant for its day, each magnetic strip uses a single code linked to a single bank account. That means that when hackers broke into the retail giant's database, they found all the codes they'd ever need to crack each and every cardholder's account. Whoopsie. Fortunately, there's another way to charge your account.

Why Chips Are Champs

Europe actually picked up on this vulnerability much sooner than the United States did. Or rather, more accurately, Europe decided to invest in the solution to this vulnerability much sooner than the United States did. But the Target hack ended up being something of a wake-up call. Chip cards and PIN readers make every transaction much more secure because, instead of using a single code that links back to your bank account, each transaction creates a unique code that will never be used again. Basically, instead of making retailers less likely to be hacked, it makes the information that they'd get from such a hack way less valuable.

It's not a foolproof solution, however. Even if thieves can't just download your magnetic strip data and print out a card of their own, a person who has your credit card number and security code is still perfectly capable of making transactions online. And not coincidentally, that exact type of fraud skyrocketed in the USA around the time that chip readers began making card-hacking that much more difficult. It all goes to show that taking an active role in maintaining your data security should always be Plan A, and stuffing your mattress with dollar bills a distant Plan B.

To make sure you don't get your credit card hijacked, you want to be sure you're not having your data stolen when you're hooking up with public Wi-Fi. If you haven't installed a VPN on your devices, you should. We're fond of IPVanish VPN. They have a strict zero-log policy and operate one of the most advanced VPN networks around the globe.

Here's How Hackers Are Trying To Steal Your Credit Card At The Gas Pump

Written by Reuben Westmaas September 22, 2017

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