SoFi

Card skimmers are small devices that fit into credit card readers (say, at a gas station or outside ATM) and snag your card information. This can then be used to steal your credentials and commit identity theft.

Unfortunately, credit card fraud is all too common, totaling more than 426,000 instances in the most recent year studied. These skimmers, installed by would-be criminals, contribute to this figure. Here’s another indicator of how pervasive skimmers are: The FBI reports that financial institutions and consumers lose more than $1 billion per year to this practice.

To help protect yourself against theft, keep reading to learn what credit card skimmers are, how to spot a credit card skimmer, and what to do if your credit card is skimmed.

What Is a Credit Card Skimmer?

Credit card skimming is a form of theft that occurs when someone installs a small electronic device, known as a credit card skimmer, into a card reader. This device can read and collect information from a credit card when someone makes a purchase. The skimmer does this by reading the magnetic strip on a debit or credit card, which provides the full name on the credit card as well as the credit card number and credit card expiration date.

Credit card skimmers have been around for almost a decade. They are most commonly attached to gas station pumps, ATMs, and other types of machines that accept payments from both secured and unsecured credit cards as well as debit cards.

Identifying Credit Card Skimmers

Knowing how to check for credit card skimmers is a great way to protect against potential theft. Especially when using an outdoor payment machine like a gas pump or ATM, take a look at the card reader for signs of a credit card skimmer. See if the card reader is sticking out at an angle or looks any different from other nearby card readers. Also check if the card reader is loose or the keypad is unusually bulky.

When skimmers first came into play, it was easier to spot a credit card skimmer as the card reader often appeared to be tampered with or wiggled when used. Today, skimmers can fit snugly over the scanner, which makes it much harder to tell if something is amiss.

In the instance that all seems well with the card scanner at a gas station, double check the pump. If a gas pump is open, unlocked, has had the tamper-evident security tape altered or removed, or anything else seems amiss, it’s a good idea to use a different pump.

If possible, it’s best to use a credit card pump that has an encrypted credit card reader. Ideally, use one that has the illuminated green lock symbol near the credit card reader — this symbolizes that it’s been encrypted.

What Happens When a Credit Card Is Skimmed

When a credit card skimmer reads a magnetic strip on the back of a credit or debit card, it can obtain the cardholder’s full name, credit card number, and the credit card expiration date. Sometimes, scammers add a small camera into the equation in order to watch someone enter their PIN number when using a debit card. Really, one of the few things that’s safe is the CVV number on a credit card, which is why it’s so important to keep this secure.

Once the thief has this information in hand, they can use the card anywhere that accepts credit card payments. They may have access to the cardholder’s bank account and could steal their identity. Or the thief can sell the information on the dark web.

Recommended: 10 Common Credit Card Scams and How to Avoid Them

Protecting Yourself From Credit Card Skimmers

If you’re old enough to get a credit card, it’s critical to know how to use it responsibly and safely. Here’s a few tips to keep in mind to avoid falling prey to credit card skimmers.

Use NFC or Supervised ATMs

To help avoid coming into contact with a card skimmer, try to use payment terminals that are supervised by security cameras or skip using the card reader altogether and make a Near Field Communication(NFC) payment. NFC payments are secure transactions made with a smartphone, allowing you to avoid swiping your card at all.

Check and Recheck the Keypad

When it comes to how to spot a credit card skimmer, remember to check the keypad for any signs of tampering. These days, it’s a bit harder to identify when a keypad has a skimmer on it, but if anything seems amiss, use another payment machine or go inside the gas station or bank to make a transaction or withdrawal.

Don’t Leave Your Card Unattended

Whenever possible, make a transaction or withdrawal inside of a gas station or bank. The odds of a criminal accessing inside payment terminals with a clerk watching are much lower compared to outside payment terminals. It only takes criminals a few seconds to add a skimmer to an outside payment terminal where no one is watching.

Just like taking the time to compare the APRs on credit cards, spending a few extra minutes going inside to buy gas or take out cash can pay off. It could help you avoid countless hours of dealing with identity theft as a result of credit card skimming.

Use Credit Cards With a Chip

If you’re familiar with what a credit card is, you’ll know that most credit cards today come with a “chip” that allows consumers to make payments without actually swiping their credit card. With an EMV chip, it’s possible to simply tap a credit card instead of swiping it to make a payment, which helps avoid credit card skimming. If you have a card that is old-school and lacks a chip, you might ask the issuer if an updated version is available.

Be Vigilant

If someone does need to use an outdoor ATM or gas pump, use one that is close to the building and preferably in the line of sight of an attendant, security guard, or security cameras. The more hidden a payment terminal is, the more likely it is that there is a credit skimmer placed on it. Also make sure to be aware of your surroundings when using any exterior payment terminals.

Sign Up for Credit and Debt Alerts

One way to catch fraud is to sign up for alerts that send a notification any time a purchase is made with the card. After all, it’s unlikely a fraudster’s activity will result in a negative balance on a credit card.

By receiving an alert right when a purchase is made, you can confirm whether or not you made it. If you believe an unauthorized purchase was made, contact your bank or credit card issuer immediately.

Check Your Account Regularly

To be extra vigilant, double-check debit and credit card statements frequently to make sure that no unauthorized charges slipped through the cracks. It can be easier to stay on top of charges if you check in throughout the month rather than waiting until you receive your credit card statement and being shocked that you’re almost at your credit card limit due to unauthorized spending.

Can You Get a Refund if Your Card Gets Skimmed?

If you realize your credit card or debit card has been skimmed, check in with your bank or credit card issuer about next steps. You should also put a freeze on your credit report to ensure that the fraudsters aren’t applying for new credit cards in your name. In some cases, you may need to file a police report.

The credit card issuer or bank will have fraud protections in place and should refund you for any money lost. These protections are an important part of how credit cards work. Still, the sooner you cancel the cards and stop the fraud, the better. Most top credit cards have zero-liability policies that will refund the full amount of the fraudulent charges. If they don’t, the maximum liability anyone has as a consumer is $50.

The Takeaway

Skimmers, small devices that fit over credit card readers, are unfortunately a common way that financial credentials can be stolen and unauthorized charges or identity theft enacted. These are especially common at gas station pumps and outside ATMs. With a debit card, consumers aren’t entitled to as much protection regarding theft, so it’s helpful to use a credit card whenever making purchases at an outdoor payment terminal that’s vulnerable to skimmers. Still, it’s important to know how to spot credit card skimmers so you can hopefully avoid them.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What does a credit card skimmer do?

Credit card skimmers illegally collect information from credit and debit cards. Skimmers are typically attached to outside payment terminals like ATMs or gas stations.

Are card skimmers illegal?

Yes, credit card skimmers are illegal. This is why credit card issuers are creating new technology like chips to help make purchases more secure.

How common is credit card skimming?

Credit card skimming is all too common. The FBI reports that it costs financial institutions and consumers more than $1 billion per year.

Photo credit: iStock/greyj

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOCC-Q224-1884859-V1

Yes, you can open a bank account for someone else, but there’s an important condition. To do so, you either need to also be an account holder or have a certain form of access. For instance, you can likely open an account for your kid, your spouse, or someone who has deemed you their power of attorney. In most cases, that other party will need to be present and participate in the account opening process.

Here’s what you need to know about the ins and outs of the process.

How Do Bank Accounts Work?

Bank accounts act as a vessel to park and often use your money. Typically, banks, credit unions, and other financial institutions offer several different types of accounts. Each works in its own way. Some standard offerings include:

•   Checking accounts. A checking account allows the account holder to deposit funds and use the money to pay bills, write checks, or shop with a debit card. While some accounts earn interest, it may only be a tiny percentage.

•   Savings accounts. Unlike checking accounts, savings accounts are designed to hold and grow your money for an extended period. You can then use this money in the future or keep it as a rainy day fund. Savings accounts typically earn interest. Federal law may restrict the number of withdrawals you can take out of a savings account; check with your financial institution for details.

•   Money market accounts. Similar to savings accounts, money market accounts earn interest. Some money market accounts may have a debit card and check-writing features. Also, the number of withdrawals you can make from this type of account may be restricted.

Is It Possible to Open a Bank Account for Someone Else?

Now, for the question “Can I open a bank account for someone else?” There are three circumstances in which banks allow you to open an account for someone else. Either you’re opening the account for a minor, a joint account holder, or you hold power of attorney for another individual. Here’s a bit more detail on each of these situations.

•   Bank account for a minor. Minors cannot open a bank account according to federal law. Therefore, if you want to begin teaching your kids the concept of saving early on, you can open an account for a child. You do so by opening a custodial account or joint account. With a custodial account, the child owns the funds within the account, but the parent manages them until the child reaches the age of maturity, which is usually 18 years old. With a joint account, you and your child both have access to the account. As the parent, though, you can monitor the activity within the account, like setting withdrawal limits.

•   Bank account for a co-owner. Your other option is to become a joint or co-owner of a bank account. When you set up a joint bank account, you and the other co-owner have access to the funds. In many cases, you will be able to make deposits and withdrawals at your discretion; in others, you will need the other account holder’s approval to conduct transactions.

Usually, you open a joint account with someone you have already established a financial relationship with, like a spouse or other family member. Once you open the account, you can go about managing the joint bank account together.

•   Power of attorney. When someone gives you a power of attorney, you can manage their bank accounts on their behalf. However, you must keep your own money separate from their accounts. When opening the account, the bank usually requires a legal power of attorney document and a photo ID. You may also need to fill out the bank’s power of attorney form. Also, the account will usually be in the other party’s name, but you will have authority over the account.

Steps to Open a Bank Account for Someone Else

There are typical steps for opening a bank account, though every bank, credit union, or other financial institution may have a slightly different process. Although the details may vary, here are some common steps you will usually take when opening a new bank account for someone else.

Valid Proof of Identity

The first step to opening a bank account for someone else is to provide a valid proof of identification. When you’re opening an account for a minor, you and your child must be present during the account opening process. You and your child will also have to provide a form of identification such as:

•   U.S. driver’s license

•   Social Security card

•   Birth certificate

•   Immunization record

•   School photo ID

•   Passport/alien ID.

When you’re opening an account with someone else who is not a minor, both parties usually must be present to open the account. Also, you will have to provide the same forms of identification. Some common forms of identification include:

•   U.S. driver’s license

•   U.S. state ID

•   Passport.

If you’re a power of attorney for someone else, you will also need to bring your notarized power of attorney legal document. Depending on the bank, they may also require you to fill out a power of attorney form to accompany the rest of the documentation.

Basic Information

In addition to showing valid proof of identification, you will likely need to fill out an application. On the application, the bank will request personal information from each account holder. This information can include:

•   Social Security number or Tax ID (for business accounts)

•   Utility bill to verify current address

•   Name

•   Address

•   Phone number.

Initial Deposit

Some banks may also require an initial minimum deposit or a monthly minimum balance to keep the account active. Typically, banks require between $25 and $100 to open an account. However, some institutions may have no deposit requirement. It’s a good idea to know upfront if you’ll need to deposit funds to activate your account.

Recommended: What Is a High-Yield Savings Account?

Things to Consider When Opening a Bank Account for Someone Else

Opening a bank account for someone else may involve a family member. In these cases, you probably feel pretty sure the other party is trustworthy.

But what about opening an account for someone else who is a friend or distant relative? Consider these points before you open a bank account for someone else.

•   Limited privacy. When you combine your finances with another individual, you forgo your privacy when managing your money individually. For example, the other account holder can see all of the transactions within the account and know how you spend your money. So, if this raises some concerns, you may want to reconsider.

•   Shared financial responsibilities. Opening an account with someone else means you may now need to share financial responsibilities such as paying bills or saving for joint retirement (as well as any account fees). If the contributions or withdrawals are uneven, this financial partnership could be harmful, so discuss each party’s contributions and expectations for managing the account.

•   Use multiple accounts. If the idea of merging financial lives doesn’t suit you, you might want to continue managing your money separately and use the joint account for a few shared expenses. This way, you can keep your privacy while managing your money with someone else.

Recommended: How to Achieve Financial Minimalism

The Takeaway

Yes, you can open a bank account for someone else. However, they will usually have to be aware and participate in the account opening process. But, before you open an account on someone else’s behalf, make sure you understand the financial implication of this decision, such as forgoing your privacy. While the process is fairly straightforward, you do want to be sure the parties involved understand the ground rules and are comfortable with the shared access and responsibility.

Whichever path you take (shared or separate accounts), you can find banking options with SoFi.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Can I open a bank account on behalf of someone else?

Yes, you can typically open an account for a minor or joint account holder. However, both parties will need to be present to open the account. It’s also possible to open an account on behalf of someone else if you’re their power of attorney.

What do I need when opening a bank account for someone else?

When opening a bank account for someone else, you and the other party must usually be present. You and the other applicant will also need to provide valid proof of identification, as well as personal information like your Social Security number and address.

Can I open a bank account for a younger sibling?

Yes, you can open a bank account for younger siblings as long as they are over 18 years old and participate in the opening process. If they are under 18, they may need a parent or legal guardian to open the account with them instead.

Photo credit: iStock/kate_sept2004

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.30% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.30% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.30% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/8/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOBK0124024