Yes, I've had several creditors drop my accounts that had zero balances because they weren't making money off me. The account security procedures are a joke as well. A determined data miner with your name, date of birth, and mother's maiden name can get through the lowest level of call center operators more easily than you may think.

One of my former employers had a laptop with thousands of unencrypted employee names and SSN numbers stolen. Shortly there-after, "someone" opened a Macy's account with my information. I don't shop at Macy's.

I didn't find out until the account was put into collections, and simple requests like "show me the application and surveillance video of who opened the account" have met with deaf ears. So, why do I have to pay for an account that I didn't open?

Most recently, the one card I do have a balance on has given me an ultimatum: "Pay us 29.99% interest monthly from now on OR pay 19.99% on your outstanding balance, and by the way, we're closing your account." Oh, gee, I wonder which option I'll take...

I'm to the point now that my question would be "Why does any sane person need to pay 29.99+ percent interest just for the privilege of paying for something later?" Even my formerly "no limit" American Express card now has a $1,000 limit on it - even though the account was paid in full every month.

I've transitioned back to paying cash for everything. I've lost the safety and convenience of not having to cash, but if the credit card companies want to continually disrespect and shun the customers who actually pay bills, so be it. They can pay me for holding onto my money.

Cash is alright for paying for coffee and groceries and such, but there are a lot of things in modern life that can't be done without a debit or credit card. For example, making a hotel reservation over the phone would be prety much impossible, as would participating in Mahalo.

If you do have a card, how often you use it probably doesn't make a lot of difference to your risk of this kind of identity theft.

What this does show though is that we need good protection for consumers when they become a victim of this kind of crime, to ensure they don't lose out because of issues beyond their control.

Meanwhile in times when money is tight its a good idea to pay cash when you can anyway, because it feels more real, and we tend to be naturally more attentive to just how much we're spending and not throw it around as lightly.

-- Quote

"When you pay in cash, you see your wallet getting thinner," says Dan Ariely, Professor of Behavioral Economics at Duke University. But when you use a credit card, the spending is abstract, "and that makes you trigger-happy."

-- /Quote

http://edition.cnn.com/2009/LIVING/personal/08/13/o.six.shopping.traps/

No I dont think credit cards are too risky. Cash is no better I mean people get mugged and banks get robbed every day and they all steal cash not plastic. I believe that as time goes on banks will become more secure and theft like this will slow down. Increased regulation might be a decent idea but probably wont help. Plastic is safer than cash becuase it has protections built in for the customer where as when cash is gone its gone.

Credit cards do incur a greater loss if your identity is compromised. However if you lose your wallet the cash is truly lost whereas if the credit card is cancelled in the statutory period you will not personally incur any less (unless you can be proven to be party to any costs incurred)

Also, is you but goods on a credit card and are not satisfied with them you will be refunded by the credit card company who then has to recover the cost from the vendor. If you were to use cash to buy the same item you'd have to try to do this yourself and would have far less leverage to get a no quibble refund.

If you are careful with your credit card, it can be far less risky than cash.

The advantages of cash is that it limits your loss to the amount you have, is relatively anonymous and is accepted everywhere. The credit card is very convenient, comes with added protections and if provided with fraud protection is still valuable.

I recently read "Stealing your Identity' by Frank Abignail (The guy represented in "Catch me if you Can"), who having turned from poacher to game keeper has a great insight into the relative merits of different payment methods and great advice on limiting your risk.