What are the most common problems reported with credit or debit
cards, according to FDIC staffers who respond to consumer inquiries? Here they are, along with guidance on how to prevent and resolve those problems.
1. Billing errors and other disputed transactions: Billing errors include a charge on your credit card bill that isn't yours or an incorrect dollar amount on a credit or debit card transaction. Other problems might include a payment that didn't show up on your statement or a dispute with a merchant over something you purchased.
To reduce the odds that you'll be charged for something inappropriately, promptly review your monthly statements. With your credit card, the Fair Credit Billing Act (FCBA) protects you from paying for a purchase that wasn't yours or that you didn't agree to. But you must write the creditor (a call isn't sufficient) using the address given for billing inquiries (not the payment address), and your letter (or any complaint form provided with your bill) must reach the creditor within 60 days after the first bill containing the error was mailed to you. "I recommend that you send your dispute by certified mail, with a return-receipt requested, so that you have proof that the creditor received it on time," says FDIC Senior Consumer Affairs Officer Janet Kincaid. Also include copies—not originals—of any sales slips or other relevant documentation, and keep a copy of your request.
The FCBA also allows you to withhold payment for defective goods or services purchased with a credit card until the problem has been corrected, under certain conditions. In general, the purchase must be for more than $50 from a merchant in your home state or within 100 miles of your home. Your card issuer may offer additional protections.
Even though debit card transaction amounts are deducted from your bank account immediately—or within a few days—you have protections against errors and defective purchases under the Electronic Fund Transfer Act (EFTA) and industry practices. So, notify your financial institution immediately if there is a problem involving your debit card. While the EFTA does not require you to put your complaint in writing, it's a good idea to do so.
Update: New Law to Make It Easier to
Obtain and Correct Your Credit Reports
In an important development, Congress in November 2003 passed a new law that can help you ensure the accuracy of your credit information and monitor your credit files for signs you may be a victim of identity theft. The law will enable you to obtain a free copy of your credit report once a year from each of the three major credit bureaus; this provision will take effect over a period of nine months, beginning December 1, 2004, in western states and moving east with completion scheduled for September 1, 2005. Nationwide as of December 1, 2004, you’ll have the right to learn your credit scores, which are designed to help predict how likely you are to repay a loan or make payments on time. As of that same date, merchants also must notify you if they plan to report negative information about you to a credit bureau. The Federal Trade Commission (www.ftc.gov) and the Federal Reserve Board (www.federalreserve.gov) have issued rules to put the new law into effect.
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2. Application Denied or Downgraded: Consumers get upset when they apply for a credit card and, because of incorrect information in their credit report, their request is denied or they are offered less favorable credit terms than they expected. Credit report errors can happen, so periodically get a copy of your credit report to make sure everything is correct. It's especially smart to review your credit report before applying for a mortgage, credit card or other important loan, so that an error doesn't slow down your credit approval. And if you do find an error in your credit record, write to the credit bureau that prepared the report and provide copies of relevant documentation.
You can get your credit record by contacting any of the three major credit bureaus: Equifax (call 800-685-1111 or go to www.equifax.com on the Internet); Experian (866-200-6020, which is toll free, or go to www.experian.com); and TransUnion (800-888-4213 or www.transunion.com). Their reports can vary, so some experts suggest that you review your credit report from all three credit bureaus. Your report is free in some cases but can cost no more than $9 under current law. If a creditor rejects your card application based on your credit report, you must be told so and given a chance to correct inaccurate information. That is one situation where you may be eligible for a free credit report.
3. Late Payment Fees: You say you mailed your credit card payment on time or you paid through your bank's electronic bill payment service... and you still got hit with a $30 late fee. Why? Financial institutions mark credit card payments as "paid" on the day they are received, not the day you mailed it. While the federal Truth in Lending Act (TILA) says a card issuer must credit your payment as of the date of receipt, most card issuers suggest that consumers allow seven to 10 days for payments to be received and credited. Find out your bank's cutoff time for card payments. Some have a 10:00 a.m. deadline for payments to be credited that day. Also, send your payment to the address indicated by your card company. Mailing to the wrong address can cause late or even missed payments. And if you know your "late" payment arrived on time, contact your card issuer to resolve the matter.
Consumers using their bank's electronic bill payment service also should recognize that it still may take two or more days for their credit card company to receive the funds. To be safe, pay a few days in advance.
4. Changes in Terms: Credit card companies have the right to change interest rates or terms, as outlined in the cardmember agreement. However, FDIC attorney Mark Mellon explains that "if your card contract permits a change in rate or terms, a notice must be mailed or delivered to you at least 15 days prior to the effective date." Carefully read the information in your monthly statement or other mailings from your card company. If you don't want to accept a rate increase or other change, you can contact the card issuer and try to negotiate a better deal but there's no guarantee it will agree. If you decide to close the account, Kincaid says, do so in writing, "and know the rules for canceling the card, such as how long can you continue using the card and making payments under the existing terms."
With debit cards, federal rules generally require that a notice of changes in fees or terms be mailed or delivered at least 21 days before the effective date. Again, read the information that is sent to you and, if you disagree, try to negotiate or shop around for a better deal.
5. Confusion Over Promotional Offers: You're probably familiar with deals like "zero percent interest" on a credit card or "no payment on merchandise until next year" if you put your purchase on your charge card. These offers usually are for limited purposes and time periods, something many consumers don't focus on until they run up unexpected charges. "These offers can be good, but you've got to read the fine print and do the math," adds Kincaid. Example: Some offers may require you to pay the balance in full by the due date or you'll be charged interest on the entire balance, starting with the date of purchase, even if you have been making payments throughout the term of the promotion.
