The nation’s consumer protection agency, the Federal Trade Commission recommends that safe use of credit cards can help to avoid a credit calamity.
Prompt Credit for Payment.
If the bill is not paid on time, the cardholder may have to pay late fees and additional finance charges. Generally, the card issuer must credit the account the day they receive payment.
The exceptions are:
- The issuer is not required to credit the payment that day if the cardholder has not made the payment according to its requirements.
- The issuer can require an account number or payment stub with the payment.
- If a delay does not result in a charge to the cardholder, the issuer does not have to credit the account the day the payment is received.
Sending the payment to the wrong address could delay crediting the account for up to five days, even if the payment is received by some office of the issuer. A return notice must be kept, to show that the company received the payment. The cardholder must check the billing statement to be sure s/he has the right due date for each account.
Automatic debiting to the cardholder’s bank account can be a convenient way to pay bills in a timely way. If the cardholder decides to set up automatic debits, the creditor must:
- disclose the terms of the transfers in a clear and understandable way;
- have the cardholder sign a written or electronic authorization; and
- give the cardholder a copy of the authorization, disclosing the terms.
Refunds of Credit Balances
The cardholder can keep the credit on the account or write the issuer for a refund if there is a credit balance on the account and the amount is more than a dollar. The card issuer must send a refund within seven business days of receiving the cardholder’s request. The issuer must make a good faith effort to send the cardholder a refund, if s/he has not asked for a refund and has not made any other purchases for more than six months.
Errors on Bill
Card issuers must follow rules for correcting billing errors promptly. They must send the cardholder a statement outlining these rules when s/he opens an account and at least once a year while the account is open. If the cardholder finds a mistake on the bill, s/he can dispute the charge and withhold payment on that amount while the charge is being investigated. However, the cardholder has to pay any part of the bill that is not in dispute, including finance and other charges not related to the disputed amount.
In order to dispute a charge, the cardholder should write to the issuer at the address indicated on the statement for “billing inquiries.” The cardholder’s name, address, account number, and a description of the error should be included in the letter. It must reach the issuer within 60 days after the issuer mailed the first bill with the error. The issuer must acknowledge complaint within 30 days of receiving it, unless they’ve resolved the problem. The issuer must resolve dispute within two billing cycles or 90 days, whichever is later.
If a credit card is used without the permission of the cardholder, s/he can be held responsible for up to $50. If the cardholder report the loss before the card is used, s/he cannot be held responsible for any unauthorized charges. However, if a thief uses the card number and not the card, the cardholder is not liable for the unauthorized charges.
The cardholder must report a loss as soon as possible to minimize the liability. The reporting letter must include the account number and the date the cardholder noticed the card missing.
Disputes about Merchandise or Services
A cardholder can dispute charges for unsatisfactory goods or services, if s/he made a good faith effort to resolve the dispute with the seller, if the charge is for more than $50, or if s/he made the purchase in the home state or within 100 miles of the current billing address. In addition to disputing the charge with the issuer, a cardholder can file an action against the merchant in small claims court.
The duties of a cardholder include:
- Not to lend the card to anyone.
- Not to sign a blank charge slip. To prevent changing the amount, draw lines through blank spaces on charge slips above the total.
- Not to put the account number on the outside of an envelope or a postcard.
- To be cautious about disclosing the account number on the telephone or online.
- To keep the receipts so that s/he can reconcile the charges on the bill.