Credit Card Blog

We all know you should destroy your old credit cards that are no longer being used. Scissors and shredders get the job done, but how much fun is that? Almost some! There’s got to be more entertaining ways to destroy your card, so I’ve searched YouTube to bring you the top 5 ways to dispose of your credit cards. Kids, don’t try this at home.

5. Microwave it
This may not be the most effective means but still a fun method of destroying your credit card. I really expected it to spark and crack rather than melt.

4. Blow it up
Amateurs and explosives just don’t go together, however they do make for some great comedy.
3. Blend it
I don’t think anyone will be getting those card numbers.
2. Mow it
It’s hard to tell from the shaky footage, but I think we all know how this turns out.
1. Shoot it
Just fast forward trough the first five minutes and enjoy the carnage.
I was rather disapointed with what I didn’t find, so I also present my top 5 list of ways of disposing of a credit card I’d like to see.

5. Burn it with a laser.
4. Disolve it in acid.
3. Shred it with an angle grinder
2. Place it on the train tracks like a penny.
1. Cryogenically freeze it and bash it with a hammer.

Did you know that your ATM pin is not stored ANYWHERE? That is assuming you don’t have it written down on a sticky pad stuck to the back of your card. You’re probably thinking “It has to be stored somewhere. How else would they know if you enter it correctly? ” Well there’s an interesting story behind that.

Most people think that when you enter your PIN in an ATM, a call is made to some back-end database that compares the pin you enter to the one they have on file, if they match then access is granted. This is close, but not quite accurate.

The problem with having a massive database of account numbers and PINs is that it’s just too risky. No matter what steps you take to secure this list, there’s always the risk someone could get a hold of it, and the effects would be devastating to a bank. So they have a clever system to help mitigate this risk.

Remember when you first got your ATM card and you were assigned a default PIN and told to change it? This PIN wasn’t just some random number the bank assigned you it’s the “natural pin” which holds significant value.

This natural pin is generated by a complex mathematical formula. In short it involves encrypting your card number using a set of encryption keys that your bank keeps extremely secure. Usually these keys are only contained on the one system that generates the natural pin, and on paper in the bank vault. Once that account number is encrypted, it is then converted to decimal format and certain digits are stripped out of that decimalized version, which become the natural pin for that card.

You are then forced to use that ATM card in one of that bank’s ATMs and change your PIN before it can be used anywhere else. When you do this, the PIN you enter isn’t stored at your bank but rather an offset. For example say the natural PIN assigned to your account was 0112 and you chose the pin 1234, the offset would be 1234-0112 which is 1121 and is what’s stored with your bank.

If the banks database of these PIN offsets was ever compromised all that would be gained is your PIN offset of 1121 which would be worthless to the person who obtained it unless they also had the encryption keys and formula the bank uses to generate the natural PINs.

So you’ve probably seen the commercials by now of the people in line at a cafeteria, dancing and twirling around, paying for their food with credit cards and quickly moving on. That is until some one decides to pay with the dreaded CASH and the whole party comes screeching to a halt.

I don’t know about you, but for me paying with a credit card has never been faster than paying with cash. It’d be nice if you could just swipe and move on but it’s never that simple. You always have to wait for it to authorize and for a receipt to print first. Fortunately you don’t have to sign the receipt at most fast food joints any more, but it’s still not faster. I think it could be though.

The reason it takes so long is because the vast majority of the credit card terminals use a modem to connect to the processing gateway, and as I’m sure many of you remember it takes a while to make that connection and send the data. So why not get with the year 2000 and send the data over an always on high speed Internet connection? You’ll more than make up for the extra $20 a month it costs over a regular phone line in labor savings and happy customers.

Not secure you say? Not true. Credit card numbers are safely transmitted over the Internet all the time using SSL encryption. With these dedicated machines you can take it a step further and establish a VPN (virtual private network) making the transactions quite secure and instant!

Oh yeah, and quit giving me the second receipt for the credit card transaction, the first one for the actual food total is sufficient. Also do away with the separate machine for processing the transactions buy a register with it integrated. With these few changes maybe we could all just swipe and go like the commercials suggest.

Several years ago websites began asking for the Card Verification Value (CVV), those three digits on the back of your credit card. It’s also called Card Security Code (CSC) or Card Verification Code (CVC). The idea behind this code is it proves you are in possession of the card because this value is not stored on the magnetic strip.

This was a good idea at first, however once you enter that code on a website for the first time, it immediately becomes worthless as a security measure. That merchant now (potentially) has this code and can go to other websites and order items as you.

The solution to this problem has existed for quite some time. They’re called security key fobs, and people in the IT industry have been using these for years to connect to private networks. It’s a small device that connects to your key chain that generates a “random” number every so many seconds that you must provide to log in. This number isn’t random at all but is generated by encrypting the current time using a security key that is unique to that device. Since this code changes every few second you have to be in possession of the device in order to log in.

A company called InCard Technologies has developed a payment card that has this feature built in. The card has a display screen button and battery inside. Whenever you press the button a code is displayed on the screen that is valid for the next few seconds. Using a system like this instead of CVV code would solve the security problem with entering credit card information into a website. If anyone obtained the card data submitted and tried to use it the transaction would fail because the random key code is no longer valid.

It’s not cheap for small store owners to accept credit cards. Not only do they have to pay set up charges, buy or rent equipment, get a dedicated phone line or other connection for the equipment and often pay monthly fees, they also have significant per transaction fees.

On average a small retail store has to pay somewhere around 20 cents per transaction plus 2% of the transaction amount whenever you pay by credit card. That means when you pay for your meal at the local deli, $0.30 of that $5 goes towards credit card processing fees.

30 cents may not seem like much but it adds up. You also have to consider the full $5 of the sale isn’t a profit to the merchant, in most cases closer to $1 of it is. That’s a 30% decrease in income. So be polite and use cash for your small purchases.

After years of using ATMs I’ve stumbled across several unsolved mysteries I never quite understood. Some are just funny curiosities others I really always wanted to know the answer to. I’ve talked to others and realized I’m not alone in just not along in being confused by these enigmas. I decided to research the answers to each of these questions, so I present to you my seven wonders of the ATM world. With answers!

The Wonders

1. Why do ATMs allow you to enter the amount you wish to withdraw in penny increments? If I type in I want $53.28 it’s not like it’s going to shoot a quarter and three pennies out of the bill changer. Pretty much all ATMs only give out cash in $10 or $20 increments so I won’t even get the three ones! Why not just type in the dollar amount? It sure would be a lot simpler.

2. Why do-drive up ATMs have Braille? This is a common wise-crack many people have made. The rationale is blind people shouldn’t be driving, and there’s warning on most drive up ATMs telling you not to walk up and use them, so why have Braille.

3. What does the Braille say? This isn’t one I’ve heard any one else ask, but I think the better question than why do the drive up ATMs have Braille is what could it possibly say next to those buttons? The function of the buttons change with every screen. In recent years they added headphone jacks that probably solve this problem, but for years they didn’t. So what do the buttons say?

4. What’s with the $2.50 or more fee you have to pay when using an ATM from another bank? I can almost understand the $1.50 fee the foreign banks ATM charges you for using their machine, but why does your own bank charge you another dollar. They don’t charge you when you use that same card to pay for something at a store so why is it any different when you use an ATM. The $1.50 seems high too, especially when you only take out $20. A merchant is only charged around 30 cents on average to make that same $20 purchase on your check card.

5. Is the “Fast Cash” option really any quicker? I don’t think so. I rather skip that screen all together and just go to the 10 key. It takes me longer to search for the dollar amount on the Fast Cash screen and try to figure out which button it almost lines up to than to just type it in. Also the inputs are usually in $20 increments so I have to go to the 10 key anyways to get my $50 out of the machine.

6. Why are PINs 4 digits? It seems backwards that my email provide feels it’s necessary to secure my account with a password that is at least 8 characters, alpha numeric, has at least one upper and lower case letter and at least one number, yet my bank it feels four numeric characters will suffice. It’s 1 in 10,000 pretty good odds of guessing someone’s pin? If you consider that most people use some sort of date as their pin in MMDD format, you’re down to 1 in 365 odds.

7. What do you do if the ATM give you the wrong amount? There’s usually a number to call on the ATM, but how do you go about proving you got the wrong amount.

The Answers

I researched these answer to the best of my ability, however on some of them the answer just isn’t there to be found so I had to go on speculation.

1. It appears to be for consistency sake. When you make a deposit you can enter a decimal amount, so they provide that option for withdrawals as well to keep the input format consistent.

2. The primary reason is legal compliance. The Americans with Disabilities Act requires all ATMs to be accessible by the blind. You may think this is one of those stupid laws in the case of drive-up ATMs, but there actually are some good scenarios where the Braille would be needed. The main one that comes to mind is for when a blind customer is in a cab and needs to get cash.  I know I sure don’t want to give my card and PIN to a random cab driver!

3. All ATMs are designed differently but on most the Braille options are just the numeric values for the 10 key and alpha values for the option buttons. For the years blind customers had to memorize the keystroke sequence. Fortunately newer ATMs have headphone jacks which provide audio instructions.

4. In short because they can. Most people are surprised to learn that the primary source of income for many banks isn’t the interest they make from loans or from investment commissions, but from charging fees. Overdraft fees, refinancing fees and yes ATM fees. It has become a significant source of income for banks over the past decade and rates continue to rise. Of course customer frustration with this also continues to rise and many customers have begun switching banks. As a result some banks have stopped charging fees and certain online only banks have gone as far as reimbursing their customers for the fees the other bank charges when using a foreign ATM.

5. It’s not faster for me, but then again I’m pretty quick with 10-key and usually want $50 which is not on the menu. However, not everyone is 10-key proficient and are many are ok with taking a $20 increment. It has an added benefit of encouraging you to get a $20 increment which allows the bank to more efficiently pack the ATM with mostly $20 bills.

6. Old standards are hard to change. Even if your bank decided to install a full keyboard and allow alpha-numeric, you’re going to have a real problem when you go to foreign ATM that still only accepts 4 digit numeric and try to get your money out. What incentive does any bank have to be the first to offer this? There’s also some interesting standards around how ATM pins work that would have to be changed. We’ll talk more about this in a later post.

7. In theory they should be able to count the cash remaining in the machine and find the difference. Even if not, if you’re a good customer and they don’t have any other reason to suspect fraud from you, they’ll usually just give you the benefit of the doubt to keep you as a customer. If all else fails a call to your local TV station should get the problem solved for you.

We are excited to be launching our blog. For years Creditor Web has been providing you with informative articles on managing your credit cards and making wise financial decisions. Here you will find posts having to do more with interesting findings in the credit card industry rather than how-to type articles. We hope you enjoy our posts and find them both informational and entertaining.