credit card security - silo your risk

This is how you need to think when it comes to credit card fraud:

 I am going to get pwned one day. What measures can I put in place to proactively minimize the damage? 

You’ll quickly find out that having your card defrauded is not the end of the world… 99% of the time the bank will investigate the dodgy transactions and, provided they’re satisfied is fraudulent, you’ll get your money back from their insurers.

Here, once again, is the question to ask yourself:

 If I was suddenly down $5,000, and couldn’t get the money back for 5 months, what position would that put me in? 

I was defrauded whilst on holidays many years ago and it took 5 months to get the funds back. The unfortunate fact is that many people I know would go personally bankrupt if $5,000 suddenly dropped out from under them for any period of time.

A solution? Silo your risk.

How? Create a bank account or a credit card with a balance or a limit that would minimize the impact of fraud (e.g. $500). Transfer money into it as you need to spend it. It won’t prevent fraud, but it will lessen it’s impact.