In the Consumer Reports June 2011 issue, the article “House of Cards” gives some disquieting information about the outdated security technology employed by American credit card issuers. Three pieces of almost shocking information are:

• Information necessary to complete a transaction stored on American-issued credit cards is virtually unprotected.
• Technology for higher level credit card security exists and is used extensively throughout Europe and Canada
• In general, US credit card issuers have no plans to switch to the enhanced technology in the immediate foreseeable future.

It is surprising and perhaps even shocking that our country, which is a world leader in so many areas, is classed with unindustrialized nations in Africa when it comes to levels of security associated with debit and credit cards.

By 2012, one would be hard-pressed to successfully use a credit card issued in America at a bank in Europe, and they will not be accepted in China by 2015. That is, unless the technology employed on American-issued credit cards changes.

While most of Europe and Canada have embraced EMV (Europay MasterCard® Visa®) technology with its embedded chip that both stores data and transmits data with encryption, American credit cards still feature the magnetic strip that stores all the information necessary to make a transaction without any encryption. While information on a magnetic strip is easy for a criminal to access using a skimmer, the encrypted EMV data is also protected by a unique identifier that can change with every purchase. In addition to the embedded encryption of EMV cards, another level of protection is a required PIN for both credit or debit card use.

If the magnetic strip information is not encrypted, what protection do most American-issued credit cards have?

• Required PIN access numbers
• Limited or Zero liability for credit card fraud
• Rigorous monitoring activity by credit card issuers

Although many American cards require a PIN to complete transactions, the ease with which the magnetic strip information can be stolen makes them an attractive target for thieves. According to the Consumer Reports article, in 2010, 32% of American credit card users reported credit card fraud within the 5 previous years. Much of the fraud is through a process called “skimming” where skimming equipment is installed over or in a terminal such as a gas pump or an ATM. In addition to a skimmer, thieves often also install pinhole video cameras or keypad overlays to capture PIN numbers. Once the information is accessed, it can be used to create a counterfeit card or sold, usually over the internet, to other criminals.

Most American credit card issuers do protect the consumer with limited or zero liability on credit card fraud, but the process of investigation of possible fraud often takes several weeks during which the consumer is on his or her own to cover any financial obligations regardless of what has been stolen out of the account.

Although the magnetic strip is unencrypted, the American credit card issuers assure that they protect consumers by employing sophisticated systems to monitor for fraudulent activity. Chase® card states they have 1,000 personnel responsible to detect fraud. VISA touts their real time fraudulent detection system.

If the technology exists to prevent or greatly deter incidents of credit card fraud, why isn’t the American banking industry rushing to incorporate it? Essentially, the loses incurred due to credit card fraud haven’t hurt enough. According to the “House of Cards” article, merchants cover over 43% of debit card losses and over 50% of credit card losses due to fraud. In addition, merchants have to pay credit card issuers an interchange fee for every completed transaction. Sometimes these fees can be quite high, which is why some businesses don’t accept certain credit cards. Supposedly the reason for assessing the transaction fees is to help defer fraud costs.

Of course, merchants aren’t going to absorb either the fees or the losses. Those costs are passed onto the consumer. The bottom line is that credit card fraud doesn’t affect the banking industry’s bottom line enough – yet.

The cost to switch over to the EMV technology is rather staggering. Consumer Reports estimated that the banking industry expense would be approximately 2.85 billion plus an additional 310 million to install needed technology at ATM terminals. It was also estimated that nationwide merchants would spend 2.64 billion to update their payment transaction technology.

Already, large corporations in America, such as WalMart®, are installing contact and contactless readers while others, such as McDonald’s® and Sears®, are lobbying the banking industry to make the change.

Change is coming. It is inevitable. It is only a matter of time. But the American credit card industry has given no indication of how much time. Meanwhile, American-issued credit card holders would do well to know the physical location of each of their credit cards, monitor closely the charges reported on your monthly statements, be aware of anything suspicious at point of payment terminals, and have a list of your credit cards and each credit card issuer’s customer service numbers so you can easily call to report any suspicious activity on your card.

As a young child, I spent a lot of time with my grandparents. Some of my fondest memories are of my grandmother telling me stories. One of the ever-present favorites was the fable “The Tortoise and the Hare.” How often I heard the axiom, “Slow and steady wins the race.”

As an adult, I’m amazed at how many times that axiom has popped into my mind and been a sort of guide in my decision-making, including decisions about credit cards.

The glut of credit card options can be overwhelming for anyone to wade through in a quest to make a wise decision about which card to apply for. Many reward offers are attractive. Equally appealing are the tempting zero-percent cards. However, for anyone with a fair amount of debt to pay down, a low interest card is a wise choice.

Let’s face it. Life has a way of landing us in unexpected circumstances. Whether a temporary job loss or a medical emergency or the break down of a large appliance or a vehicle, any one of us could find himself in a unexpected circumstance where a major amount of debt is incurred. Once we get back on our feet by finding another job or recovering our health, how do we address the new debt we suddenly find ourselves saddled with?

Why not a zero-percent card? A zero-percent card is a great option if you know you can pay off the balance by the end of the introductory zero-percent offer. Read the fine print before you select a zero percent card and be sure you understand what your interest rate will become at the end of the introductory period. Some zero percent offers have a steep interest rate after the initial offer. For instance, I needed to replace car tires the other day. I could save $90 if I opened a credit card account at the tire dealership. The card’s zero interest jumps up to a whopping 26.99% after the initial six months is over. An interest rate like that could add a lot to a debt load if one cannot pay off the card balance at the end of the initial zero-percent offer.

I believe my grandmother’s axiom comes into play. Wisdom would dictate looking for a low interest rate credit card that would allow me to intentionally pay down my debt at a steady pace each month without a punishing amount of interest charged on the balance.

In taking this steady approach to debt reduction, look for a card with a low interest rate. At the same time, check to see that the card has no annual fees. On top of no annual fee and a low interest rate on both new purchases and existing balance, if you can find a card that offers a lower initial interest rate for balance transfers, I’d consider applying for that card.

A low interest credit card I’d personally highly recommend is IberiaBank Visa® Classic Card. This particular card offers relatively low interest rates, a great six month introductory 1.99% rate on all balance transfers, and no annual fees. IberiaBank Visa® Classic Card just received top ratings in the Consumer Reports Top Low-Interest / Fees Cards of 2010.

If life has handed you unexpected debt or you’ve just decided to make an effort to become debt free, this low interest rate card would be a great one to transfer balances to. With normally low rates, a great introductory offer, and no annual fees, it definitely allows the consumer some breathing room while he makes progress in paying off debt in steady, monthly increments.

For me personally, the answer to that question is a resounding yes! Customer service isn’t just about talking with someone on the phone or at a counter and having them answer my question or conduct a transaction for me. It’s more about my overall impression of the entire experience; the atmosphere, the goods or services and the way I was treated makes the complete package, not just some salesperson sucking up to me to get a sale. I understand that not every person at every company has the capacity to perfrom at such a standard every time, but there are a few companies out there who just seem to get it right while others can’t.

Take for example two credit card companies – USAA and American Express. Both companies have received the highest rankings for customer satisfaction, one from Consumer Reports and the other from JD Power and Associates. Is this a coincidence that I have accounts with both of these companies? Not exactly. USAA is more by coincidence for me, but without surprise, while American Express is solely by choice. My experience with both of these companies has been excellent and it is no surprise to me that either of these companies receive high ratings from other customers and ultimately from organizations like Consumer Reports and JD Power and Associates. Using a credit card from American Express does come at some cost, but I knew that before I became a customer. To me that additional cost or slight inconvenience is more than worth it.

Just like you I’ve also had bad customer service experiences too. For many years I used cellular services provided by Sprint because I was getting a “great deal” (price) on my monthly bill. However, anytime I had a problems with my phone or service,  I had to go to a Sprint store where I expected to leave there completely frustrated with my blood near its boiling point. Sure the reps were nice for the most part, but no one could ever seem to really help me or fix my problem. Why I stayed with them for so many years, I don’t know, but I now recognize the money I saved on my monthly bill was not worth it at all. When the opportunity to switch to a different provider presented itself, I did so without hesitation. The money I saved resulted in a lot of frustration and an overall bad customer service experience.

So I beg the question, does customer service influence where you shop or which companies you use? For me the answer is clear, I would rather pay more, sometimes a lot more, to have customer service experiences like those I’ve had with USAA and American Express. Leave us your comments and feedback.