The world of credit card security comes with an entirely new language. Words like "skimming," "shoulder surfing" and "phishing" may sound less criminal than stealing, but they are, in fact, ways in which money and personal details can be stolen off your credit card. There does not seem to be any definitive global figures on losses from credit card fraud, but a study last year by Aite Group suggested that card fraud costs the U.S. card payments industry about $8.6 billion annually, with the bulk of the losses falling on card issuers. The numbers are staggering, and the cost of fraud will only get worse if the proper technologies are not developed. The main problem the card providers face is keeping one step ahead of the criminals.
Here are some of the anti credit card fraud tools and technologies in place to protect our credit cards, and what basic protection steps we should also be taking.

TUTORIAL: Credit Cards: Pros And Cons

Chip and PIN
If you're a frequent international traveler, you've likely experienced difficulty making a purchase with your U.S. credit card abroad. That's because over the last decade, many countries outside of the U.S. have switched from magnetic swipe cards to chip and pin credit cards. Instead of swiping and signing for a purchase, this technology reads a chip in the card and the customer then enters a PIN to verify and complete the transaction. But chip and PIN is coming to America, as two major banks have announced they're getting into the chip and pin credit card game. (For more, see Credit Scams To Watch Out For.)

The U.K. has been using chip and PIN since 2003, and has seen this dramatically reduce credit card crime in cases where the cardholder is present. The chip identifies the card and marks it as a legitimate card. The PIN number provides an additional layer of security, because it is a number which is only known to the owner of the card. U.S. banks still issue debit and credit cards with older and less secure magnetic stripe technology, which is more prone to fraud.

Unfortunately, chip and PIN cards are not foolproof. Several vulnerabilities have been found and demonstrated over their years of use elsewhere, and there have been large-scale instances of fraudulent exploitation. However, cards with embedded chips are much harder to clone, and thus their introduction will help to cut counterfeit losses for Americans. (For more, see 5 ATM Scams That Can Break The Bank.)

Active Fraud Protection
Credit card companies have teams of people monitoring the use of your credit card - looking for unusual activity. They are usually looking for internet use, "card-not-present" usage or foreign transactions. Fraudsters will often make several very low value purchases to test the card, which can alert fraud teams. If anything seems suspect, it is standard procedure for card companies to phone you directly and discuss the details. (For more, see Stop Scams In Their Tracks.)

Online Fraud Protection
The increase in internet fraud is not surprising, when you look at how many more businesses are accepting online transactions, and how many millions of individuals use their card details to shop online. As such, providers are committed to putting additional measures in place to make online fraud difficult for scammers.

"Verified by Visa" and MasterCard's "SecureCode" are free services under which your purchases are protected by online passwords. They are secure personal passwords that are only known to the cardholder, and without them you are unable to make online purchases on your credit card. This provides an additional level of validation, and (in a similar way to the PIN number) means that, if stolen, it is that bit more difficult for the criminal to use your card. (For more, see The Pioneers Of Financial Fraud.)

Go Back to Basics and Protect Yourself
All of these technological advances are designed to protect our details, but there are simple steps that we can take ourselves to protect our cards, monies and identity.

Never ever write down your PIN number. Not on the card, on a scrap of paper on in your cell-phone. Hide your PIN number when withdrawing cash, and if you suspect the ATM has been tampered with, do not use it and report it immediately.

The Bottom Line
If you are shopping online, ensure that your virus protection software is running and up-to-date and that your wireless connection is secure. Remember that a card provider would never ask for personal details in an email, so never give them away. Whenever you are paying, try and stay with your card to prevent any card skimming. If a waiter needs to take your card to the till - go with it! (For more, see Debit Card Fraud: Is Your Money At Risk?)

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