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How to Keep Your Spending Habits Secret from Companies

Not too long ago, I wrote a post about retail rewards and privacy [3]. In today’s world, all sorts of people are collecting data about what you are doing. While your spending habits aren’t quite being used to change your interest rates in all cases, or being compiled as part of your credit report, there are some credit card issuers that will take into account whether or not you bought retread for your tires, or whether you spend a lot of time at the bar.

Plus, with the recent rise in bank profiling [4] of certain consumer behaviors, some think that it is only a matter of time before specific spending habits could become more important to your financial future. Whenever you use a loyalty card, it is possible for your purchases to be tracked. When you swipe at the grocery store, issuers can see where you are spending your money. If you want to be a little more anonymous, there are some options, but they are few and far between, and true anonymity without paying cash for everything is practically impossible. But you can limit how much of your spending is “out there.” Just be sure to check for fees, since many prepaid debit, credit and gift cards have some sort of fees attached to them.

Buying Gift Cards with Your Credit Card

One of the reasons that people use credit cards is to build up reward points. So, while cash is the ultimate in anonymity, you might want to build up some rewards. One of our readers recently offered a suggestion:

Suppose that I have a 2% general cashback card, and I run $1000 of core expenses through it every month.  Is the $20 I gain worth the loss of privacy?

One thing that can be done is to use a cashback card to buy retail gift cards (no fee), and then use the gift cards for everyday purchases.

This would eliminate the need for loyalty cards at the grocery, since your cashback would make up for your savings, and specific purchases wouldn’t be tracked. You could also buy gift cards for different stores, since many retailers offer gift cards to different restaurants, iTunes, and retail outlets. You could buy a group of gift cards at one store, and then use them — and your name wouldn’t be attached to them.

You get points for your purchase, and future purchases remain mostly anonymous. However, your purchase at the store where you bought your cards would still be recorded.

Buying General Gift Cards

In some cases, the next option is to buy general gift cards. You can purchase a gift card with a Visa or MasterCard logo, and not have to attach a name or address to it — and you can use them fairly anonymously almost anywhere that credit cards are accepted. If you are really serious about having the convenience of plastic anonymously, you can buy these branded gift cards with cash.

However, you should be aware that these cards can be hard to use online. This is because, to prevent fraud, many web sites automatically match an address or ZIP code with what’s on file with a card. So, a gift card that has no name or address attached to it can’t be verified. You will be hard-pressed to find a site that will accept the card number and security code without some other type of verification.

Bottom Line

If you want to be truly anonymous in your purchases, you will need to use cash only, and avoid paying online in most cases. If you use some services that promise to protect your privacy, you will need to be prepared to pay fees. You can limit how much specific information about your purchases gets out there, though, by purchasing and using gift cards.

What are your tips for purchase privacy? Do you know of any anonymous debit or credit cards that can be used? Do you have strategies for anonymous online purchases? Share your tips below.

(Photo: alancleaver_2000 [5])