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Electronic Payments Information |
Electronic Payments Reveal Information - Every transaction processed by Visa and MasterCard is assigned a merchant category code (MCC), a four-digit number that represents the type of merchant providing a service or selling certain merchandise. For example, the MCC is used by credit card issuers to restrict unauthorized spending on health care related credit cards and debit cards. Some health care flexible spending accounts allow users to make purchases only at pharmacies or merchants with medical supplies. Business owners also use the codes to prevent employee abuse of company credit cards on business travel and related expenses.
On the other hand, credit card issuers use this electronic data to track and monitor cardholders spending. It is a common industry practice to analyze this data for trends. Many card issuers offer cardholders annual reports of their spending that categorize purchasing by type of merchant and total spent. This information can be useful to help families budget for the coming year and determine where they can cut back or increase spending.
To protect your credit and this data mining by credit or debit card issuers, you may want to switch to prepaid debit cards instead. Credit card issuers increasingly are using this data to determine whether you are a good credit risk or not. This purchasing data can then be analyzed to determine your credit card's interest rate, line of credit, or the risk you present to a card company.
A suggestion is to use prepaid debit cards for all your ‘non-traditional’, internet, or high risk merchant transactions, like casinos, secondhand clothing stores, pawn shops, court or summons payments, and dating services.
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