Here's How Magnets Actually Affect Your Credit Cards

I was recently gifted a charming, kitschy magnet, and as I tucked it into my wallet for safekeeping, I couldn't seem to remember: Do magnets spell doom for credit cards? Many of us have held onto vague rumors about the potential dangers of magnets interfering with the functionality of our credit cards. Let's take a look at the relationship between magnets and credit cards, and separate fact from fiction.

Magnetic strips on traditional credit cards

Traditional credit cards feature a magnetic strip on the back, which stores important information such as your card number, expiration date, and security code. This magnetic strip is susceptible to demagnetization, which can occur due to prolonged exposure to magnetic fields (or physical damage).

When a magnetic strip becomes demagnetized, the data stored on it can become corrupted or unreadable. This means that card readers at stores or ATMs may have difficulty recognizing your card, potentially leading to declined transactions or other issues.

(Sidebar: This is why you've been told not to keep your hotel key card next to your phone; your phone is a potential source of magnet exposure that renders key cards inoperable.)

While it's unlikely that everyday exposure to weak magnetic fields will cause significant damage to your credit card, it's still wise to exercise caution. Stronger magnets, such as those found in speakers, MRI machines, or certain industrial equipment, can pose a real threat to the integrity of your card's magnetic strip.

Additionally, mishandling or scratching the magnetic strip can also contribute to demagnetization, as the physical damage can disrupt the magnetic particles that store your card's data.

Your card's chip solution

To address the vulnerabilities of magnetic strips, the credit card industry has been transitioning towards EMV chip technology. EMV (which stands for Europay, Mastercard, and Visa) cards feature a small, embedded microchip that generates a unique code for each transaction, providing enhanced security and eliminating the risk of demagnetization.

Unlike magnetic strips, these chips are not affected by magnetic fields or physical damage, ensuring that your card's data remains intact and secure.

While magnetic strips are still present on many credit cards for compatibility with older payment terminals, the EMV chip has become the primary method of transaction processing, significantly reducing the potential impact of magnets on your card's functionality.

Protecting your credit cards

To minimize the risk of demagnetization and ensure the longevity of your credit cards, you should keep them away from strong magnetic sources and handle them with care. Avoid storing them near speakers, magnets, or other devices that generate powerful magnetic fields, and be mindful of preventing physical damage to the magnetic strip.

As EMV chip technology continues to be the mainstream, the concern over magnets affecting credit cards will become increasingly obsolete. However, it's always wise to exercise caution and follow best practices to safeguard your financial information and ensure smooth transactions.