What you need to know about new credit card chips

NEW YORK (WABC) -- If you own a credit card, chances are you've received a new card in the mail recently that is outfitted with a high-tech chip to help reduce fraud.

This Thursday, October 1, is the deadline for merchants to be outfitted with the technology to handle the chip.

Call it chip-dipping 101 at Polished Beauty Bar on the Upper West Side of Manhattan.

Owner Suzy Nam teaches a crash course several times a day to her clients. Many, she says, are are unsure how to dip their own chip-enabled credit cards.

"We've actually seen an increase of clients coming in with the chipped cards," she said.

The computer chips, small metallic squares, will soon become the global standard on credit cards. Widely used across Europe already, all U.S. stores are required to have new chip card readers by October to avoid fraud costs.

"That chip is used to generate a one-time code unique to the transaction," said Stephanie Ericksen, Vice President of Risk Products for Visa. "So if a criminal were to hack the system and steal data, they couldn't use it to create a counterfeit card or do counterfeit fraud."

Ericksen explained that since every chip-dip has a different code for each purchase, criminals can't steal your info from a skimmer attached to swiping device, because it won't work when they try to use it.

"That code is changing all the time," she said. "It's actually a mathematical calculation."

And so far, the technology is unbreakable by any cyber criminal. But while the chip will combat two-thirds of all fraud in stores, you're still vulnerable elsewhere.

"Remember, there's all other types of fraud," NerdWallet.com financial analyst Farnoosh Torabi said. "Online shopping, when you're giving your number over the phone, so this is not a magic bullet."

Torabi warns to still use precautions with Wi-Fi and secure servers shopping online, but use the chip when you have the choice.

"You should always opt to dip now, because that's really the added protection that the EMV chip provides," Torabi said.

You just may need some help figuring out how to dip your chip, and don't forget to take it out.