Money Clips are a popular choice due to their simplicity & ease of use. They are smaller in size than most traditional wallets and can be easily used as a front pocket wallet. Most of these money clips come with magnets to hold your bills and credit cards. Since magnets are known to erase the data on the Magnetic stripe of a credit card, I tested them to confirm its effect.
Are Magnetic Money Clips Safe for your credit cards? No. Magnetic money clips are not safe for credit cards that use magnetic strips. A strong magnetic field generated by the permanent magnets can damage and erase data stored on your credit card's magnetic strip if the card is stored inside the money clip for a long time.
All Money clips don't come with a magnet, so you can still use the non-magnetic types without any issue. Another thing to consider is the usage of the magnetic strips. Do you use it any more at shop checkouts? The technology is changing, and magnetic strips are getting obsolete.
Let me discuss this in detail.
Types of Money Clips
There are many types of money clips and a few of them are totally safe for your credit cards.
Magnetic Money Clips: These are popular due to the satisfying snap sound of the magnetic closure, and as discussed, they will demagnetize the magnetic stripe of a credit card. They come in various shapes. The most basic is just just a leather band having two magnets at the tips. Other designs have proper credit card slots and places to keep the bills.
Stiff Metallic Spring Clips: Metallic spring clips are the most common ones. You can find these clips as a stand-alone clip to hold your bills & credit cards or attached with a wallet. The grip comes due to the elasticity of the metallic clip. These are perfectly safe for your cards and won't affect the magnetic stripe.
Bi-Fold Wallet With Bar Clamp Clip: These clips are a little complex but work great in conjunction with a Bifold wallet. These clamps have a spring-activated clipping process and are perfectly safe for credit cards.
Carbon Fiber Money Clips: These use the same metallic spring clips method to hold your cards and cash except for its build material, carbon fiber. These are popular clips that are lightweight and strong. They are also safe for credit cards since they don't use any magnets to hold them together.
Metallic spring clips are better than magnetic money clips as they are safer for credit cards, and grip increases as you put in more cards and cash.
On the other hand, magnets tend to lose grip as they are pulled apart. The more items you put under the magnetic grip, the more they are pulled apart and the less the holding grip is on the items.
Why Credit Cards Have a Magnetic Strip?
The first thing you need to understand is why credit cards have a magnetic strip? Whenever you make a purchase online, you manually fill in the credit card details. Similarly, when you buy groceries at a physical store, the cashier fills in the Credit Card numbers in the POS (Point of Sale) machine to complete the transaction.
To make this process fast and efficient, the magnetic strip contains this same information, and the POS machine can read it in a fraction of a second, avoiding long queues at grocery stores. There is no additional sensitive information stored in the magnetic strip except for the credit card numbers you already have engraved on your credit card.
Incase, the magnetic strip is not working, you can ask the cashier to fill in the information manually.
How does a magnetic strip work on a credit card? Like the old-school magnetic floppy disks or cassette tapes, the data is stored by aligning miniature magnetic particles (tiny magnets) made of iron-based material. The card reader can very accurately measure the magnetic field of the strip to decode the data. This strip is also known as Magstrip.
Types of Credit Card Magnetic Strips
To erase data stored on magnetic strips, you will need an external magnetic source strong enough to change the magnetic particles' alignment on the strip. Based on how much strong magnetic field is needed to erase the data, the magnetic strips are divided into two categories i-e high coercivity & low coercivity cards.
Note: Coercivity is the strength of magnetic material to resist external demagnetizing force and is measured in Oersteds.
High coercivity cards
Bank Credit Cards normally come with a high-coercivity strip. These strips last longer and are difficult to rewrite or destroy. As per International Standard ISO 7811-6, a coercivity of 2500-4200 Oersted is recommended. The purpose of Hi-co is to avoid any accidental erasure to retain readability. Generally, these cards have a black or silver film.
Low coercivity cards
The standard hotel cards, season passes, or cassette tapes have low-coercivity and require around 300 Oersteds to erase. These are less expansive and easy to re-write. Generally, these cards have a dark brownish film.
How to Prevent Your Cards From Demagnetizing
So, if you already own a magnetic money clip or decide to get one, you can follow a few precautions that can help you avoid demagnetizing your credit card's magnetic strip.
- Money Clip is for Money: As the name suggests, use your money clip for cash only so that you don't have to worry about demagnetizing your credit card. You can also sandwich your cards inside the cash to reduce the probability of erasing your data on the strip. You can use Apple or Samsung Pay to reduce your dependency on a card altogether.
- Use a Steel Sheet: A thin steel strip between the magnet and your cards can reduce the magnetic flux to some extent. This will not completely eliminate the risk of demagnetization but will help reduce the strong magnetic flux, especially near the magnetic poles on both sides.
- Stack the Cards Properly: Put the card you regularly use a little away from the clip's magnets if it comes with multiple card slots. You can also sandwich the primary card in the center to avoid demagnetization. Keep your hotel cards away from your wallet to avoid demagnetizing as they are low-coercivity cards and are prone to data erasing relatively easily.
- Get RFID or microchip EMV cards: These cards are not affected by magnets. Most POS machines are equipped to read EMV or smart RFID cards. Getting these cards from your bank is your best bet to use the money clip you love so much.
Do you need the Credit Card Magnetic Strip Anymore?
The technology has evolved over the years, and the magnetic strip on credit cards' is rarely used nowadays. Following technologies have replaced the magnetic strip. Since magnetic strip POS machines are still in use, all credit cards come with magnetic strips as well.
Nowadays, most credit/debit card comes with an EMV chip. EMV chips utilize a protocol developed by Europay, Mastercard & Visa to stop credit card frauds. I will not discuss the technology in detail, but there is no effect on the chip when it comes in contact with magnets.
Contactless EMV smart cards (RFID)
These credit cards utilize a contactless technology based on RFID (Radio Frequency Identification). The communication Protocol between the POS machine and the credit card is the same developed for EMV cards.
Just like EMV chips, money clips have no effect on contactless smart cards and are totally safe to use. However, these RFID cards are prone to RFID skimming. I have discussed the security risks of RFID cards in this blog post
Can you use a money clip with credit cards?
You can slip in your credit cards, IDs, license, etc., inside a money clip with your cash. If the money clip is a metallic spring type, adding more stuff will increase the grip and make it safer and harder to lose your items. The magnetic clips might not work if you put in more stuff, and you may also risk demagnetizing your credit card's magnetic strip.
Can magnets damage gift cards?
Gift Cards are normally digital or have a code to use. If it is so, the magnets can not damage a gift card. However, if your card is swipeable, it will be a low-coercivity card and will definitely get damage if kept with magnets.
Is a money clip better than a wallet?
Money clips are more minimalist and normally have all the features of a good wallet. However, they are a little hard to use as you will have to keep your cash folded and all cards together. It is more of a personal preference. Some people like traditional leather wallets and others like money clips better.
Is it bad to keep credit cards by your phone?
There is no harm in keeping your card with a phone. The electromagnetic signals from a phone are weak to erase data on your card's magnetic strip.
Can an iPhone 12 Magnetic Sleeve erase my card data?
No, your cards are totally safe in a magnetic sleeve wallet from Apple. This is because the magnets in the sleeve and the iPhone 12 make a close loop with no magnetic flex wandering on to the outer side to affect your cards. You can use your cards without any worry with your iPhone 12 MagSafe wallet.