The First Credit Card With an On/Off Switch

Have you ever misplaced your credit card, but weren’t sure if it was truly lost or stolen? When this happens, you may want to cancel your card, but then you know that you will have a lot of inconvenient problems to deal with. On the other hand, you might continue to look for the card, by which time a thief could be going on a spending spree with it.

But now, one credit card offers customers a third option when they want to temporarily disable their account without declaring their card lost or stolen. The Discover card now has an option called Freeze it that allows cardholders to suspend their card when it is misplaced.

How Freeze it works

Cardholders can now go to the Discover website or mobile app and place a freeze on their account, or by calling Discover. This triggers a freeze on new transactions including cash advances and balance transfers, but does not affect any telephone, Internet or automatically scheduled bill payments. This feature is available on all versions of the Discover it card, all of which have no annual fee.

Without this feature, cardholders who choose to cancel their credit cards won’t be able to make any online or telephone transactions, as their account will be completely frozen, not just their physical credit card. In addition, they will have to wait until a new card can be printed and physically delivered to them. Also, those who have set up automatic bill payments will have to contact each biller, cancel the payment, and provide them with a new card number.

Other Possible Uses for Freeze it

While Discover is promoting this feature as a way to combat potential fraud without reporting a card lost or stolen, it is conceivable that cardholders could use this feature in other ways. For example, some credit card users have taken to actually freezing their credit cards in blocks of ice in order to help control overspending, rein in their debt and boost their credit (you can see how your credit card spending is affecting your credit scores for free on Freezing their account in this manner could be a more practical alternative, yet the impracticality of melting a large ice block is part of the attraction of the original method.

Using Freeze it might also be a way for a primary cardholder to temporarily cut off their authorized cardholders. Let’s say that you have made one of your family members an authorized cardholder, but you wish to temporarily rescind those charging privileges. Freeze it would accomplish that goal, however the cardholder would still be able to make online and telephone transactions, while you as the primary account holder would also be unable use your card in person.

Other Ways to Avoid Reporting Cards Lost or Stolen

As mobile wallet providers gain traction among credit card users, we could see a time when loss or theft of physical credit cards become rare. This will result in both more convenience for cardholders and fewer expenses for credit card issuers, who must print and mail out new cards, often using an overnight delivery service. Furthermore, the addition of EMV smart chips has increased the cost to manufacture new credit cards from around 10 cents each to more than a dollar.

Finally, cardholders must also be aware that they are always protected from fraudulent charges by the Fair Credit Billing Act, which limits their liability to a maximum of $50. In practice, nearly all credit card issuers waive this limit by offering zero liability policies.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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This article by Jason Steele was distributed by the Personal Finance Syndication Network.