In the developed world, only the United States still uses credit cards with a magnetic strip on the back. Other countries long ago switched to cards with embedded microchips. The chip stores cardholder data in addition to account info. You control the PIN that initiates a transaction; encrypted info is skim-proof.
Now, a few U.S. banks are issuing some cards with both a magnetic strip and an embedded chip. JPMorgan Chase is distributing the cards to JPMorgan Palladium cardholders, and will issue the cards to other customers later this year. Wells Fargo has handed out chip-embedded Visa Smart Cards to 15,000 cardholders, and Citibank has also launched a pilot program. Big banks aren't the only fans. The United Nations Federal Credit Union converted its Visa Elite card to a chip card last fall and plans to replace some other cards this year.
The cards are good news for travelers, who may have problems using magnetic-strip cards abroad. And switching to chip-and-PIN cards would cut fraud losses by an estimated 30%, experts say. No wonder Wal-Mart, the world's largest retailer, is retrofitting all its terminals to accept the cards.