Think Your New Credit Card isn't Activated?

For most consumers, it's a familiar process: A new credit card arrives in your mailbox, you open the envelope, and the card bears a sticker reading, "Please call from your home phone to activate your card." Until then, your brand new credit card is as useless as a paperweight -- and just as secure, right?

Not necessarily. The startling truth is that while some unactivated cards are automatically declined, many others sail through a purchase without a hitch. In those situations, anyone could come along, take that new credit card from your mailbox and use it.

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Credit cards

"Very few banks send out a card that can't be used, at least in low-risk situations," says Scott Stevenson, founder and CEO of Eliminate ID Theft, a credit protection service. "But I'd bet most Americans think you cannot use a card unless you call and activate it."

'It went through'
Linda Pack of Norfolk, Va., is one of the few who already knew that activation wasn't necessary. "I was fairly sure that it would work because, as an insurance agent, I've set up payments via a credit card over the phone, and we were allowed to set up the payments with cards that were not yet activated." So when she got a renewal credit card that required an activation phone call, she went ahead and used it anyway. "I just changed the card information on Amazon.com, made a purchase, and it went through."

Other cardholders have used inactivated cards to buy cosmetics, clothing and restaurant meals. One news report details a woman charging more than $200 with no problem.

Keep on shopping
While certain card issuers, including Discover and Wells Fargo, mail cards that can't be used without activation, some, such as Capital One and Bank of America, may allow small purchases -- a coffee at Starbucks, for instance, or an online buy. Still others, reluctant to slow down a dedicated shopper, will allow a handful of purchases before you're forced to activate. "In the card world, there's a lot of issuer discretion, so this is one of those things where there's no hard and fast rule," says Peter Ho, product manager for card services and consumer lending at Wells Fargo.

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Chances are, you'll never know whether your card comes locked-down or ready to use unless you give it a try, as did Eva Graham, of Newington, Conn.. She charged a few purchases, problem-free, using a newly arrived American Express card -- a replacement for one she had lost. After a few days, the card was suddenly declined. When she called for help, a customer service representative reminded her that she had forgotten to activate the new card. "I then asked them why I was able to make the prior charges, and they told me they were allowed to go through as a courtesy. It did worry me a bit that I was able to use it without activating; however, AmEx is very good when there is a disputed charge."

The sticker solution
So if nonactivation doesn't necessarily paralyze your card, why do card issuers bother with that tiny sticker that orders you to call and activate?

Cynics would say the likely reason is that your phone call to activate your credit card provides your bank a golden opportunity to sell you something. Once they have you on the phone, bank customer service representatives often launch into an extended sales spiel offering such add-ons as theft protection and credit monitoring.

Count Lauren Kolbe, of St. Louis, as one of the activation skeptics. "We have a credit card, which routinely seems to be compromised in some way, according to the credit card company, so they cancel the card and send us new ones," she says. "Of course, when we call to activate the new cards, there is always a sales pitch along the lines of, 'Since your card was compromised, you should sign up for all of the identity protection services we offer.' It happens so frequently that my husband and I are beginning to think they're just doing this so that you have to call them, then they try to sell you stuff."

Safe and sound?

But to Ho, of Wells Fargo, the activation call is exactly what it purports to be: a way to make sure your new credit card got to the right place. "Realistically, it's an anti-fraud measure. Our credit cards are sent through the mail stream, and we've heard of people rummaging through mailboxes and taking cards out. Activation is a security measure so that we know the customer actually got the card."

Safe and sound
To stymie an attempted card theft, your issuer may ask questions to which only you know the answers. A customer service representative may also compare the phone number you're using with the one in your application, a reason why some activation stickers specify that you should call from your home number.

If you activate your card online -- an option offered by an increasing number of banks -- you'll need to log into your online banking account; that, in itself, can serve as another way to authenticate that you're the rightful owner of the credit card.

However, even those safety measures won't keep a new card secure from sophisticated thieves, says Stevenson. "Although people think that stealing stuff out of a mailbox is an arcane way of identity theft, actual physical theft is still one of the largest categories of how IDs get stolen." And these days, it's easier than ever. A potential crook just has to rifle through your mail, grab the envelope with a credit card -- easy to identify because they come in similar envelopes, usually from a processing center, and you can feel the card inside -- and activate the card. Even imitating your phone number is relatively simple with a voice-over IP box.

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• How to Get Money Back from a Collection Agency
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So how do you keep that new card fraud-free and make the activation process as smooth as possible?

1. Send new cards to a post office box or a locked mailbox, or at least keep a close eye on your mailbox when you're expecting a new card. If it doesn't show up, notify your issuer. While you're at it, do the things you'd ordinarily do to protect yourself from fraud, such as monitoring your credit report, so you'll know if a new card is used by someone else.

2. Call to activate from your home phone number. Although some card issuers offer instructions on activating from work or a cell phone, if it says to call from home and you don't, it could flag your card, forcing you to hassle it out with your bank or wait another few weeks for a replacement.

3. Better yet, activate online or at an ATM, if that's an option. Stevenson says it's just as secure as phone activation -- and it's sales-pitch free.

4. Use your card or lose it. If you haven't activated your card after a few months, some issuers will assume it's lost and cancel it. But a few glass-half-full banks take it for granted that the card got to its destination, and you'll rack up your annual fee even if you've never used or activated the card. According to Chase spokeswoman Laura Rossi, "A customer may incur fees -- normally an annual fee -- on their card before activation, but all charges would be reversed if the customer decides to close their account before any activity occurs." Still, better to avoid the hassle and simply cancel your card (or opt for a fee-free version) if you have no intention of using it.

Activating a new credit card may be a pain, but it's definitely a better bet than letting a crook do it for you.