There was a four week period where I lost my credit card twice. The first time was when I misplaced my wallet, putting it in a strange part of the car when I went to the gym, for a few days. The second time I lost just the card after paying for something in a restaurant.
A funny thing happened… I started getting emails from services about how my card was invalid and I couldn’t be billed for services. Oh no!
Then I realized — I didn’t want some of those services anymore!
That’s when it dawned on me… I should really do this more often! Why not “lose” my credit every 12 months to reset all my recurring subscriptions?
Enter – the Credit Card Reset.
What is a Credit Card Reset?
It’s when you “lose” your credit card so that all automatic payments get suspended. 🙂
The credit card company sends you a new card and now you need to go back and update all your accounts. You must manually log into the accounts, update the card information and re-activate.
To do this, just call your credit card company and report your card lost or stolen. They will confirm the last few transactions are yours and then issue you a new card.
If you don’t have a backup card to use for the next few days, you can request that they rush the card to you because it’s your “every day card.” (those are magic words, use them) Make sure there is no charge for the rush delivery, there usually isn’t but confirm.
Why should I do this?
I haven’t convinced you yet huh?
You execute nearly every credit card frugality trick with one phone call.
Research has shown that barriers inhibit behavior. If you have to enter in your credit card information to checkout, you’re less likely to check out. To help save money, don’t save credit card information with any merchants. A credit card reset invalidates all that information at every merchant in one phone call.
It helps reduce fraud. Not only will this save you money by creating a roadblock, you reduce the chance of fraud. How many forgotten accounts do you have at smaller merchants? How many have your credit card information? When you perform the reset, the answer is “none of them have my credit card information, even the ones I don’t remember I had.”
This also will invalidate any stored credit card data at brick and mortar stores. Remember the hacks of TJ Maxx and Home Depot (and a million other places) — well now they have invalid credit card data they can’t use. Boom. You win.
Also, this reduces the need to dispute fraudulent credit card charges because your number changes so quickly!
It automatically cancels services, requiring you to re-activate them. Negative option billing is when a customer agrees to have products/services sent to them and billed later, like Columbia House and their music CDs back in the day. Many services work in a similar way, you get your Netflix subscription and you keep getting billed until you explicitly cancel it. Netflix makes it easy to cancel but not every company does. A credit card reset makes them all easy to cancel. 🙂
What else should I know?
If you use services like Personal Capital (check our review) or Mint, you may need to update those to get accurate spending information. Otherwise, you’re all set!
Have you done a voluntary (or involuntary!) Credit Card Reset lately?
Kate @ Cashville Skyline says
I almost had to do an involuntary credit card reset this weekend, Jim! Luckily, I was able to retrace my steps and find at one of the bars I went to. I like the idea of restricting yourself from spending like this, though!
Ha that’s good luck! I’ve done that many a time… sometimes I don’t even go back, I just report my card lost. 🙂
George @ Properly says
Jim, are there any negatives to “resetting” your credit card frequently?
You mean repercussions from the credit card company? I lost my card twice in four weeks and no one ever batted an eye when I asked for a new one. I don’t think it’s beneficial to reset your card more than once a year, it takes time to update all of your accounts, so at that rate I think the credit card company wouldn’t care.
George @ Properly says
Yea, I was wondering if this is something the credit card company would flag you for if it happens too often. The situation I’m thinking of is if a person replaced a card multiple times in a short time span. Then loses it again and gets fraudulent charges on it. I am wondering whether the credit card company is more likely to hold the person liable.
I haven’t heard of any problems disputing smaller fraudulent charges but I have had a couple friends who got their cards stolen and had thousands of dollars in charges racked up at clubs. The credit card company made them pay a portion of it.
The credit card company can’t hold you liable beyond a certain dollar amount ($50). It doesn’t matter if you’re careless or what, your maximum liability for fraudulent charges BEFORE you report the lost/stolen card is $50. After you report it, the liability is $0.
George @ Properly says
Ah, good to know!
Our Next Life says
I feel like my cards get stolen every few months these days (I have a lot of transactions while traveling for work — this isn’t personal spending!), so I have a lot of these accidental resets. But I never thought of doing it on purpose — I love this idea!
Thanks 🙂
I don’t know if I’ll ever have to do it manually given how often I seem to be losing cards on my own!
Allen says
Very good idea. I intentionally “lost” my cards mainly for security purposes for so many years.
Also, I NEVER setup auto pay to any financial institutions just in case “somebody” empties your accounts especially checking ones under any unforeseen circumstances.
I am still relying on paper statement now to paying my bills and it is just a couple of seconds under my fingertips while I am checking my balance in the account (usually on Friday morning each week).
Thanks for your valuable works.
Thanks Allen!
I am the opposite – I set autopay on everything! I get electronic statements (well, email notifications that I can log into see my statement) plus I get transaction notifications for my credit cards to keep on top of everything.
How would someone empty an account because of autopay?
I think everyone should do what works for them and I’m the king of sticking with what works, vs what might be “better” but makes someone nervous (in other words, do your system… it works and won’t cause you any heartburn!).
Anonymous says
Auto pay is great. But I have been victim to auto pay emptying my account accidentally. Once I had my car note taken out through auto pay and by some miracle they charged me a double payment one month. They claimed it was a system error and my bank didn’t think to question it. It was a huge mess!
I’ve never experienced that but you make a good point. And it only takes one of those events to really screw everything else up!
Kalie @ Pretend to Be Poor says
Wow, I don’t know if I’d go to the trouble of actually cancelling my card, but I definitely see why it’s good to make it hard to continue subscription services. In fact, we avoid almost all subscription services for this very reason–we hate the idea of money being sucked out of our account each month without us even thinking about it. We do use Amazon Subscribe & Save, for a number of reasons, but we always check to make sure we actually need those items before the order is shipped.
Just like how automatic savings can help you build a wonderful retirement asset, automatic subscriptions can do the reverse. 🙂
Terry says
What a great idea! I had to do this about 2 years ago due to a lost card, and have been through a lot of personal changes, not even sure how many merchants have my information at this point, so this is a great idea to do a ‘purge’ and restart. LOVE IT! Love your tips, can you give me any tips on how to get this info into the brains of my adult children?
Hit that reset button! 🙂
Forward them my emails and tell them how awesome Wallet Hacks is? 🙂 We’ve gotten a lot of folks who discover us that way… especially the first few emails where I share things like how to find your Missing Money. Someone just emailed me that they found nearly $300 from an old insurance check two states away.
Vic @ Dad Is Cheap says
I’m currently on a travel hacking and credit card sign up bonus binge, so I’m manually resetting all the accounts whenever a new card comes in so I can hit the minimum spending.
I don’t think I’d ever go too far to resetting my credit cards if I wasn’t doing this. I’m a pretty cheap and frugal person, so I agonize over most purchases as it is. I think that’s barrier enough. 🙂
Ha you know yourself best! 🙂