Why is there a chip in my new credit card?

I received a replacement credit card with a chip embedded in it.  The brochure said it was for my better security but little else was mentioned in concrete terms.  

The cynic inside of me thinks there is more to the story.   Can someone provide me with some insight on this?   Is this really a good feature?  Or some sort of marketing stunt?
brothertruffle880Asked:
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David Johnson, CD, MVPOwnerCommented:
chip and pin has been the worldwide except for the US standard for quite a while. Your account detials  is encrypted into the device using a time based code that can only be unlocked by your pin. A magstrip contains your account information that is not encrypted.
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jhyieslaCommented:
These are most likely RFID chips. As a paranoid security person, I avoid them if possible. They are nice in that with some of them you can touch and go, without having to swipe the card if the merchant supports that, but the downside is that someone with a RFID reader never your card can potentially read it as well. There are things you can do to protect yourself:

http://www.consumerreports.org/cro/magazine-archive/2011/june/money/credit-card-fraud/rfid-credit-cards/index.htm

http://www.wikihow.com/Keep-RFID-Credit-Cards-Safe
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