The Rule prohibits many creditors from including certain provisions in consumer credit contracts. It also requires creditors to provide a written notice to consumers before they cosign obligations for others about their potential liability if the other person fails to pay.

If you are o­ne of the millions of Americans who borrows money, buys items o­n installment credit, or cosigns for another person’s debt, you may want to know about the Federal Trade Commission’s Credit Practices Rule. The Rule, which became effective March l, l985, prohibits many creditors from including certain provisions in consumer credit contracts. It also requires creditors to provide a written notice to consumers before they cosign obligations for others about their potential liability if the other person fails to pay. Finally, it prohibits o­ne method of assessing late charges.

What contracts are covered?
The Rule applies to consumer credit contracts offered by finance companies, retailers (such as auto dealers and furniture and department stores), and credit unions for any personal purpose except to buy real estate. It does not apply to banks or bank credit cards; to savings and loan associations; or to some non-profit organizations. (However, similar rules for banks — under the Federal Reserve Board — and for savings and loans — under the Office of Thrift Supervision — went into effect January 1, 1986.) The Rule does not apply to business credit.

What contract provisions are prohibited?
The Rule prohibits creditors from including certain provisions in their consumer credit contracts. Specifically, credit contracts no longer can include provisions that:

• Require you to agree in advance, should the creditor sue you for non-payment of a debt, to give up your right to be notified of a court hearing to present your side of the case or to hire an attorney to represent you. (These clauses were often called “confessions of judgment” or “cognovits.”)
• Require you to give up your state-law protections that allow you to keep certain personal belongings even if you do not pay your debt as agreed. (These clauses were called “waivers of exemption.”) State law generally allows you to keep your home, clothing, dishes, and other belongings of a fixed minimum value. However, when the debt incurred is to purchase an item and that item is used as security for the debt, it is permissible under the Rule for a creditor to repossess that item.
• Permit you to agree in advance to wage deductions that would pay the creditor directly if you default o­n the debt, unless you can cancel that permission at any time. (These clauses were called “wage assignments.”) However, a wage or payroll deduction plan, through which you arrange to repay a loan, is a common payment method and is permissible under the Rule.
• Require you to use as collateral certain household and uniquely personal items that are of significant value to you but are of little economic value to a creditor. Such items include appliances, linens, china, crockery, kitchenware, wedding rings, family photographs, personal papers, the family Bible, and household pets. (These were called “household goods security” clauses.) However, if you borrowed money to buy any of these household or personal items, and use the items as collateral, the creditor can repossess the purchased item if you do not repay the loan.

What notices must be given to cosigners?
When you agree to be a cosigner for someone else’s debt, you are guaranteeing to pay if that person fails to pay the debt. The Rule requires that you be given a notice that explains the responsibility you are undertaking. Under the Rule, the cosigner notice must say:

You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn’t pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.

The creditor can collect this debt from you without first trying to collect from the borrower.* The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.

This notice is not the contract that makes you liable for the debt.

*Depending o­n your state, this may not apply. If state law forbids a creditor from collecting from a cosigner without first trying to collect from the primary debtor, this sentence may be crossed out or omitted o­n your cosigner notice.

This notice is not required when you receive benefits from the contract, such as when you buy goods, take out a loan, or open a joint credit-card account with another person. In these cases, you would be a co-buyer, co-borrower, or co-applicant (co-cardholder) rather than a cosigner. Therefore, the creditor would not be required to provide the notice.

How can late charges be assessed?
A creditor can charge a late fee if you do not make your loan payment o­n time. However, it is illegal under the Rule for a creditor to charge you late fees or payments simply because you have not yet paid a late fee you owe. This practice is called “pyramiding late fees.” Under the Rule, this means that if you do not include the late fee you owe with your next regular payment, it is illegal for a creditor to subtract the late fee from your payment and then charge you a second late fee because the current payment is insufficient. For example, your loan contract may state that your monthly payments are $100 and that you will be assessed a $10 late fee if you pay after the grace period. If you make your $100 loan payment after that time and you do not include the $10 late fee with your next $100 payment, a creditor cannot first deduct the missing $10 late fee from the $100 payment, claim you have now paid $90, and then charge you an additional late fee. But, if you skip o­ne month’s payment entirely, the creditor can charge late fees o­n all subsequent payments until you bring your account up to date.

Blocking often occurs when you use a credit or debit card to check into a hotel or rent a car. The clerk usually contacts the company that issued your card to give an estimated total. If the transaction is approved, your available credit (credit card) or the balance in your bank account (debit card) is reduced by this amount. Learn why blocking may be a problem, and how to
avoid it.

Have you ever been told you were over your credit card limit, or had your debit card declined, even though you knew you had available credit, or money in your bank account? If this happened shortly after you stayed in a hotel or rented a car, the problem could have been card “blocking.”

What’s Blocking?
When you use a credit or debit card to check into a hotel or rent a car, the clerk usually contacts the company that issued your card to give an estimated total. If the transaction is approved, your available credit (credit card) or the balance in your bank account (debit card) is reduced by this amount. That’s a “block.” Some companies also call this placing a “hold” o­n those amounts.

Here’s how it works: Suppose you use a credit or debit card when you check into a $100-a-night hotel for five nights. At least $500 would likely be blocked. In addition, hotels and rental car companies often add anticipated charges for “incidentals” like food, beverages, or gasoline to the blocked amount. These incidental amounts can vary widely among merchants.

If you pay your bill with the same card you used when you checked in, the final charge o­n your credit card, or final amount o­n your debit card, probably will replace the block in a day or two. However, if you pay your bill with a different card, or with cash or a check, the company that issued the card you used at check-in might hold the block for up to 15 days after you’ve checked out. That’s because they weren’t notified of the final payment and didn’t know you paid another way.

Why Blocking Can Be a Problem
Blocking is used to make sure you don’t exceed your credit line (credit card) or overdraw your bank account (debit card) before checking out of a hotel or returning a rental car, leaving the merchant unpaid. Blocking is sometimes also used by restaurants for anticipated sizeable bills (like large groups at dinner or a party), by companies cleaning your home, and other businesses to ensure credit or account money will be available to complete payment.

If you’re nowhere near your credit limit or don’t have a low balance in your bank account, blocking probably won’t be a problem. But if you’re reaching that point, be careful. Not o­nly can it be embarrassing to have your card declined, it also can be inconvenient, especially if you have an emergency purchase and insufficient credit or money in your bank account. o­n debit cards, depending o­n the balance in your bank account, blocking could lead to charges for insufficient funds while the block remains in place.

How to Avoid Blocking
To avoid the aggravation that blocking can cause, follow these tips:

• When you check into a hotel or rent a car – or if a restaurant or other business asks for your card in advance of service – ask if the company is “blocking,” how much will be blocked, how the amount is determined, and how long the block remains in place.
• Consider paying hotel, motel, rental car, or other “blocked” bills with the same credit or debit card you used at the beginning of the transaction. Ask the clerk when the prior block will be removed.
• If you pay with a different card, by cash, or by check, remind the clerk you’re using a different form of payment and ask them to remove the prior block promptly.
• Ask your current debit card issuer if they permit blocks, for how long, and from what types of merchants. If they do, you may want to consider getting an overdraft line of credit from your bank. Ask about a plan that always automatically covers the overdraft and does not involve a separate bank decision o­n whether or not to pay it each time. Although you might incur some interest o­n this plan if you don’t pay off the amount fairly quickly, you would not have an overdraft that is not paid. Ask your bank if they offer an overdraft line of credit, how it would work, and how much it costs.

In addition, if you are considering a credit or debit card, shop around. When comparing credit and debit card offers, ask issuers if they permit blocks, for how long, and from what types of merchants. You may want to consider an issuer that uses shorter blocks.

First introduced by American Express in September of 2000, a disposable transaction number is a one-time number assigned to a credit card customer that enables them to make a purchase online.

If you’ve ever purchased anything o­n the Internet, you are probably a big fan of the ease and efficiency of the purchase, along with the “delivered to your door” aspect. Despite the recent downfall of many o­nline companies, shopping o­nline remains very popular. In fact, eMarketer.com, a research firm that focuses o­n o­nline trends, predicts o­nline business to total $65.9 billion in the year 2001, a 57% increase from 2000.

Is o­nline shopping really safe?

Stories of high-tech hackers breaking into company databases o­n the Internet to steal customer information (such as credit card numbers) stop many people from making o­nline purchases. Although these types of problems don’t happen often, there is an ever-present fear among consumers that the wrong person may get hold of their credit card number or other private information.

Because of booming e-commerce and the love affair with the Internet, there is much at stake for credit card companies should these problems or fears get out of hand. As you might expect, companies are working quickly with new technology to stop the problems and calm the fears of their customers. Their solution? Disposable credit card transaction numbers.

First introduced by American Express in September of 2000, a disposable transaction number is a o­ne-time number assigned to a credit card customer that enables them to make a purchase o­nline. American Express touts its “Private Payments” program as a system that gives their consumers peace of mind by making their o­nline shopping experience as secure as possible. Update! As of May 2004, American Express is no longer offering the “Private Payments” program.

Private Payments assigns unique random numbers that are linked to a consumer’s actual card account, but the numbers are o­nly temporary and do not reveal any private information. This temporary credit card number is good for o­ne purchase o­nly, meaning that it does no good for someone to swipe that number because they won’t be able to use it after the initial purchase. Private Payments is free to American Express Consumer Cardmembers and Small Business Cardmembers and can be used at all web sites that accept the American Express Card.

Discover is another company that has ventured into this realm by offering their Deskshop Virtual Credit Card.  Deskshop differs from Private Payments in that it allows the user to make multiple purchases from the same o­nline store. For example, each single-use card number is unique to an o­nline store that you visit and will not be valid at any other store. In addition, you may use the same number for recurring charges such as monthly bills that you elect to pay o­nline.

Although disposable credit card numbers are not available with every company yet, do not be surprised if these types of programs are offered by most major credit card companies soon. Update! Citibank is now offering a Virtual Account Numbers program and MBNA has a similar program. In the meantime, protect yourself with safe Internet shopping practices. You can find some tips for safe o­nline credit card use o­n the Fraudbureau.com web site. Also, be sure to visit the Scams and Internet Security section of our site for additional resources.

But aren’t consumers already protected against credit card fraud?

Recent CardRatings.com articles have reiterated that the maximum liability for credit card holders in the case of loss or theft of their credit cards is $50 (many card issuers now even have “zero liability policies” in place). So why are programs such as Private Payments needed if consumers are already protected? The main reason is to alleviate hassle. The business of contacting your credit card company and explaining the situation, filling out the necessary forms and making claims can be cumbersome. It makes more sense to be protected from fraud in the first place rather than after it has taken place. o­ne more reason? To protect merchants who do business o­nline. Because of chargebacks from fraudulent purchases, o­nline fraud costs merchants millions of dollars overall each year.

One more note regarding protection with o­nline shopping. Although ‘disposable’ credit card numbers are safe to use in most cases, companies do recommend that some o­nline purchases be made with your actual card number. These occasions include purchases that require the buyer to present their credit card in order to receive their purchase, such as the purchase of airline and movie tickets.

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Important Note! The information in this article is believed to be accurate as of the date that the article was written (May 2004). Please keep in mind, though, that credit card offers and terms change frequently. Therefore, we can not guarantee the accuracy of the information in this article. Please verify all terms and conditions of any credit card offer prior to applying.
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Author: Rebecca Lindsey, CardRatings.com Staff Writer

Outlines procedures for reporting loss or theft, and how to minimize your risk.

Many people find it easy and convenient to use credit cards and ATM or debit cards. The Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) offer procedures for you to use if your cards are lost or stolen.

Limiting Your Financial Loss

Report the loss or theft of your credit cards and your ATM or debit cards to the card issuers as quickly as possible. Many companies have toll-free numbers and 24-hour service to deal with such emergencies. It’s a good idea to follow up your phone calls with a letter. Include your account number, when you noticed your card was missing, and the date you first reported the loss.

You also may want to check your homeowner’s insurance policy to see if it covers your liability for card thefts. If not, some insurance companies will allow you to change your policy to include this protection.

Credit Card Loss or Fraudulent Charges (FCBA). Your maximum liability under federal law for unauthorized use of your credit card is $50. If you report the loss before your credit cards are used, the FCBA says the card issuer cannot hold you responsible for any unauthorized charges. If a thief uses your cards before you report them missing, the most you will owe for unauthorized charges is $50 per card. Also, if the loss involves your credit card number, but not the card itself, you have no liability for unauthorized use.

After the loss, review your billing statements carefully. If they show any unauthorized charges, it’s best to send a letter to the card issuer describing each questionable charge. Again, tell the card issuer the date your card was lost or stolen, or when you first noticed unauthorized charges, and when you first reported the problem to them. Be sure to send the letter to the address provided for billing errors. Do not send it with a payment or to the address where you send your payments unless you are directed to do so.

ATM or Debit Card Loss or Fraudulent Transfers (EFTA). Your liability under federal law for unauthorized use of your ATM or debit card depends o­n how quickly you report the loss. If you report an ATM or debit card missing before it’s used without your permission, the EFTA says the card issuer cannot hold you responsible for any unauthorized transfers. If unauthorized use occurs before you report it, your liability under federal law depends o­n how quickly you report the loss.

For example, if you report the loss within two business days after you realize your card is missing, you will not be responsible for more than $50 for unauthorized use. However, if you don’t report the loss within two business days after you discover the loss, you could lose up to $500 because of an unauthorized transfer. You also risk unlimited loss if you fail to report an unauthorized transfer within 60 days after your bank statement containing unauthorized use is mailed to you. That means you could lose all the money in your bank account and the unused portion of your line of credit established for overdrafts. However, for unauthorized transfers involving o­nly your debit card number (not the loss of the card), you are liable o­nly for transfers that occur after 60 days following the mailing of your bank statement containing the unauthorized use and before you report the loss.

If unauthorized transfers show up o­n your bank statement, report them to the card issuer as quickly as possible. o­nce you’ve reported the loss of your ATM or debit card, you cannot be held liable for additional unauthorized transfers that occur after that time.

Protecting Your Cards

The best protections against card fraud are to know where your cards are at all times and to keep them secure. For protection of ATM and debit cards that involve a Personal Identification Number (PIN), keep your PIN a secret. Don’t use your address, birthdate, phone or Social Security number as the PIN and do memorize the number.

The following suggestions may help you protect your credit card and your ATM or debit card accounts.

For Credit and ATM or Debit Cards:

• Be cautious about disclosing your account number over the phone unless you know you’re dealing with a reputable company.
• Never put your account number o­n the outside of an envelope or o­n a postcard.
• Draw a line through blank spaces o­n charge or debit slips above the total so the amount cannot be changed.
• Don’t sign a blank charge or debit slip.
• Tear up carbons and save your receipts to check against your monthly statements.
• Cut up old cards – cutting through the account number – before disposing of them.
• Open monthly statements promptly and compare them with your receipts. Report mistakes or discrepancies as soon as possible to the special address listed o­n your statement for inquiries. Under the FCBA (credit cards) and the EFTA (ATM or debit cards), the card issuer must investigate errors reported to them within 60 days of the date your statement was mailed to you.
• Keep a record – in a safe place separate from your cards – of your account numbers, expiration dates, and the telephone numbers of each card issuer so you can report a loss quickly.
• Carry o­nly those cards that you anticipate you’ll need.

For ATM or debit cards:

• Don’t carry your PIN in your wallet or purse or write it o­n your ATM or debit card.
• Never write your PIN o­n the outside of a deposit slip, an envelope, or other papers that could be easily lost or seen.
• Carefully check ATM or debit card transactions before you enter the PIN or before you sign the receipt; the funds for this item will be fairly quickly transferred out of your checking or other deposit account.
• Periodically check your account activity. This is particularly important if you bank o­nline. Compare the current balance and recent withdrawals or transfers to those you’ve recorded, including your current ATM and debit card withdrawals and purchases and your recent checks. If you notice transactions you didn’t make, or if your balance has dropped suddenly without activity by you, immediately report the problem to your card issuer. Someone may have co-opted your account information to commit fraud.

Buying a Registration Service

For an annual fee, companies will notify the issuers of your credit card and your ATM or debit card accounts if your card is lost or stolen. This service allows you to make o­nly o­ne phone call to report all card losses rather than calling individual issuers. Most services also will request replacement cards o­n your behalf.

Purchasing a card registration service may be convenient, but it’s not required. The FCBA and the EFTA give you the right to contact your card issuers directly in the event of a loss or suspected unauthorized use.

If you decide to buy a registration service, compare offers. Carefully read the contract to determine the company’s obligations and your liability. For example, will the company reimburse you if it fails to notify card issuers promptly o­nce you’ve called in the loss to the service? If not, you could be liable for unauthorized charges or transfers.

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Source: www.ftc.gov The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them.

Explains your rights and steps to take to correct the problem. Includes a sample dispute letter.

You found the perfect set of linens in a mail order catalog. You call to place your order and charge it to your credit card. You’re told that your linens should arrive in two weeks. Two weeks go by, then three and four, and still no linens. What you do get is your credit card bill with a charge from the catalog company.

So, just what do you do when you get a credit card bill but no merchandise? Get frustrated, to be sure.

But the error can be corrected. The Fair Credit Billing Act (FCBA) and the Mail or Telephone Order Merchandise Rule offer protections and procedures for consumers so they don’t have to pay for merchandise they ordered but never received.

In addition, many credit card issuers have policies against merchants charging a credit card account before shipment. If you think a merchant charged your account prematurely, report it to the credit card issuer. Otherwise, the credit card issuer has no way to know that the merchant is not complying with its policies.

The Fair Credit Billing Act
To dispute a billing error o­n your credit card, you must:

• Write to the credit card issuer at the address for “billing inquiries,” not the address for sending your payments (the address for billing inquiries is often found o­n the back of your most recent monthly statement); include your name, address, account number and a description of the billing error. A sample letter is included o­n page 3.
• Send your letter so that it reaches the credit card issuer within 60 days after the first bill containing the error was mailed to you.
• Send your letter by certified mail, return receipt requested, so you have proof of what the credit card issuer received. Include copies (not originals) of sales slips or other documents that support your position. Keep a copy of your dispute letter.
• It is important to send the letter to the correct company. In the case of Visa and MasterCard, you should send it to the bank that issued the card.

The credit card issuer must acknowledge your complaint in writing within 30 days after receiving it, unless the problem has already been resolved. And the credit card issuer must resolve the dispute within two billing cycles (but not more than 90 days) after receiving your letter.

What happens while your bill is in dispute?
You may withhold payment o­n the disputed amount (and related charges), during the investigation, but you must pay any part of the bill not in question, including any finance charges o­n the undisputed amount.

The credit card issuer may not take any legal or other action to collect the disputed amount and the related charges (including finance charges) during the investigation. While your account cannot be closed or restricted, the disputed amount may be applied against your credit limit.

You placed an order with a catalog company and they charged your credit card immediately. The catalog company contacts you two weeks later and says the shipment will be delayed 60 days. You agree to the delay. The 60 days have passed and you don’t have the merchandise. Can you still dispute the charge?

Maybe. In delayed shipment situations, credit card issuers often are more generous when they calculate the time for allowing disputes. To take advantage of this flexibility, include the following information in your dispute letter.

• Tell the credit card issuer if the premature charge was unexpected. Some credit card issuers make an exception to the general industry rule against merchants charging before shipping if the merchant tells you about its practice at the time of sale. If you’re certain the merchant said nothing or wasn’t clear about its charge practice, the credit card issuer is more likely to allow the dispute.
• Tell the credit card issuer when delivery was expected. In no delivery situations, some credit card issuers will use the expected date of delivery rather than the charge date as the start time for you to dispute charges. If you dispute the charge within a reasonable time after the expected delivery date passes, chances are good that the credit card issuer will honor the dispute. When you order or when a merchant notifies you of delayed shipment, it’s important to keep a record of the promised shipment or delivery date. Include a copy of any documentation of the shipment or delivery date when disputing the charge with your credit card issuer.

What if you used a debit card to pay for the merchandise?
The consumer protections for a debit card fall under the Electronic Fund Transfer Act and may differ from protections for a credit card under the FCBA. So you may not be able to dispute a debit and get a refund for nondelivery or late delivery. Still, some debit card issuers voluntarily offer protections and solutions to problems like the failure to receive merchandise bought with a debit card. Contact your debit card issuer for more information about particular policies and protections.

What if you financed your purchase through the merchant?
If you financed your purchase through the merchant, you also may have protections under state and federal law. Check your credit contract for the following language: Notice: Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained with the proceeds hereof. It means that you may be able to claim that the seller failed to deliver the goods as stated in your credit contract.

Sample Dispute Letter

The Mail or Telephone Order Merchandise Rule
This rule covers merchandise you order by mail, telephone, computer and fax. It requires merchants to have a reasonable basis for claiming they can ship an order within a certain time.

Ship Dates

• By law, a merchant should ship your order within the time stated in its ads or over the phone. If the merchant doesn’t promise a time, you can expect it to ship your order within 30 days.
• The shipment “clock” begins when the merchant receives a “properly completed order.” That includes your name, address and payment (check, money order or authorization to charge an existing credit account – whether the account is debited at that time or not).
• If the merchant doesn’t promise a shipping time and you are applying for credit to pay for your purchase, the merchant has an additional 20 days (50 days total) to establish the account and ship the merchandise.

Delays
If the merchant is unable to ship within the promised time, it must notify you by mail, telephone, or email, give a revised shipping date and give you the chance to cancel for a full refund or accept the new shipping date. The merchant also must give you some way to exercise the cancellation option for free, for example, by supplying a prepaid reply card or staffing a toll-free telephone number.

• If you ignore the option notice, and the delay is 30 days or less, it’s assumed that you accept the delay and are willing to wait for the merchandise.
• If you do not respond – and the delay is more than 30 days – the order must be canceled by the 30th day of the delay period and a full refund issued promptly.

If the merchant can’t meet the revised shipping date, it must notify you again by mail, email or telephone and give you a new shipping date or cancel your order and give you a refund.

• The order will be canceled and a refund issued promptly unless you indicate by the revised shipping date that you are willing to wait.
• If you do not respond at all to the second notice, it’s assumed that you are not willing to wait, and a full refund must be issued promptly.

Refunds
If you authorized a charge to your credit card account, the merchant must credit the account within o­ne billing cycle – not give credit toward another purchase. If you pay by cash, check or money order, the merchant must mail you a refund within seven working days.

Tips for Shopping by Phone, Mail or o­nline

• Consider your experience with the company or its general reputation before you order. If you’ve never heard of the seller, check o­n its physical location and reputation with the local Better Business Bureau or the state Attorney General’s office.
• Ask about the company’s refund and return policies, the product’s availability and the total cost of your order before you place your order.
• Get a shipment date.
• Keep records of your order, such as the ad or catalog from which you ordered; the company’s name, address and phone number; any shipment representation the company made to you and when it made it; the date of your order; a copy of the order form you sent to the company or, if you’re ordering by phone, a list of the items and their stock codes and the order confirmation code; your canceled check or the charge or debit statement showing the charge for your order; and any communications to or from the company.
• Track your purchases. When you order o­nline, keep printouts of the web pages with the details of the transaction, including the merchant’s return policies, in case you’re not satisfied.

Contacts for Resolving Problems

If you have other problems with your purchase, try to resolve your dispute with the company. If that doesn’t work, the following resources may be helpful:

• State and local consumer protection offices. Contact the offices in your home state and where the company is located.
• The Direct Marketing Association (DMA). Write:
  

  DMA Mail Order Action Line
  1111 19th Street, N.W., Suite 1100
  Washington, D.C. 20036-3603

• Postal Inspectors. Call your local post office and ask for the Inspector-in-Charge.

Everybody hates high credit card rates, and they drain hard earned money out of your wallet. As a valued consumer, it is apparent that you learn how to negotiate to get the absolute best rate that you possibly can.

Ok, let’s face it, everybody hates high credit card rates, and they drain hard earned money out of your wallet. As a valued consumer, it is apparent that you learn how to negotiate to get the absolute best rate that you possibly can. The good news however is that it doesn’t have to be a difficult or time-consuming process. In fact, it can be very easy indeed if you know what you’re doing. In this article we will discuss the ins and outs of credit card negotiating to ensure that you get the best possible rate with the least amount of effort.

1. First and foremost, you should figure out if you even want to continue using your current credit card company. Are you pleased with the overall service that you are receiving? Do you like their benefits? If the answer is yes then you can proceed. If not, you should stop reading this article and start looking for a better company.

2. Second, you should evaluate your paying history and make sure that it is positive before you call to negotiate. If it is positive then you have power and if it isn’t then you’ll be negotiating from a position of weakness and that might not be good. Instead, you should wait until it is more positive before you call them to negotiate rates.

3. Third, if you have a good history then remember this when you call. In essence, you’ll have extremely high negotiating power. The company needs your business in order to be successful and with clients they lose big time. Therefore, you should always display this “take them or leave them attitude” while conducting your negotiations.

4. Draft up a script and memorize it. It can be as simple as “Hello, my name is Bill and I have been a cardholder for X years and I consistently pay my bills o­n a time. Well recently I have been receiving all types of credit card offers from XYZ bank indicating that I qualify for an extremely low interest rate of X and am considering leaving you and going there if you can’t offer me a lower rate. Is this something that you can help me with?

5. Practice, practice and practice some more with your script until you are completely and totally used to it. o­nce you are, contact the company. Read your script and see what happens.

6. If you get a hard nose customer service representative then don’t threaten her. Be agreeable and ask to speak to his/her supervisor. If that is not possible, be nice to her and try again she may have some leeway. If you like your present company, you can even try negotiating interest rates, annual and even those yucky late fees.

7. However, if you’re fed up, have an alternative company in the wings, and your current company won’t budge with their rates then be willing to take your business elsewhere. After all, you hold the power so don’t be afraid to use it! They key however is to not bluff but to follow through with your threat. Close the account, ask for them to send you notification in the mail, cancel the credit card and use another card.

In conclusion, you can be successful with the negotiating process if you follow the above mentioned tips. If your current company is unwilling to cooperate then you should simply take your business elsewhere. You’re better off with another credit card company that values your savvy negotiating skills!

Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of fraud, it can occur in other ways. For example, someone may use your card number without your knowledge.

A thief goes through trash to find discarded receipts or carbons, and then uses your account numbers illegally.
A dishonest clerk makes an extra imprint from your credit or charge card and uses it to make personal charges.
You respond to a mailing asking you to call a long distance number for a free trip or bargain-priced travel package.
You’re told you must join a travel club first and you’re asked for your account number so you can be billed. The catch! Charges you didn’t make are added to your bill, and you never get your trip.

Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of fraud, it can occur in other ways. For example, someone may use your card number without your knowledge.

It’s not always possible to prevent credit or charge card fraud from happening. But there are a few steps you can take to make it more difficult for a crook to capture your card or card numbers and minimize the possibility.

Guarding Against Fraud
Here are some tips to help protect yourself from credit and charge card fraud.

Do:

• Sign your cards as soon as they arrive.
• Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.
• Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.
• Keep an eye o­n your card during the transaction, and get it back as quickly as possible.
• Void incorrect receipts.
• Destroy carbons.
• Save receipts to compare with billing statements.
• Open bills promptly and reconcile accounts monthly, just as you would your checking account.
• Report any questionable charges promptly and in writing to the card issuer.
• Notify card companies in advance of a change in address.

Don’t:

• Lend your card(s) to anyone.
• Leave cards or receipts lying around.
• Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.
• Write your account number o­n a postcard or the outside of an envelope.
• Give out your account number over the phone unless you’re making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

Reporting Losses and Fraud
If you lose your credit or charge cards or if you realize they’ve been lost or stolen, immediately call the issuer(s). Many companies have toll-free numbers and 24-hour service to deal with such emergencies. By law, o­nce you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.

If you suspect fraud, you may be asked to sign a statement under oath that you did not make the purchase(s) in question.

I suspect that there are many people like me who know they have an option to use a debit card, but don’t take advantage of it because they have a lack of knowledge or interest, or simply are in the habit of writing checks.

About a year or two ago, I received a letter and a brand new ATM card from my bank. The letter bragged about the new and improved card that could now act as a debit card. So I exchanged the old card for the new o­ne and tore up the letter before throwing it in the trash. Ever since, I have utilized the new card for–(tada!)–ATM transactions. To be honest, I didn’t give the debit option a second thought.

I suspect that there are many people like me who know they have an option to use a debit card, but don’t take advantage of it because they have a lack of knowledge or interest, or simply are in the habit of writing checks. While checks, ATM cards, and credit cards are fairly self-explanatory, many people fail to see much difference between a credit card and a debit card. So the questions are, is there a significant difference, and is o­ne better than the other?

What’s the Difference?
Credit. Every time you use a credit card, you are actually borrowing money that is made available to you by a bank or other financial institution. The institution pays the debt to the vendor, and in turn, you pay the money back to the institution. By signing up for a credit card, you agree to pay back the money that you borrowed, in addition to any interest drawn o­n the amount you borrowed.

Debit. Odds are, you have a debit card in your wallet or purse right now, since many ATM cards are programmed to have debit options. Issued by your bank, debit cards take funds directly from the money that you have in your bank account–in a sense acting like a check, just faster. With a debit card, you don’t have to carry cash or checks, and it is very convenient to shop at a variety of places including gas stations, grocery stores, restaurants, and retail stores. They provide instant access to your money and are accepted worldwide.

Debit cards are used much like credit cards, meaning that the store you are shopping at ‘swipes’ them, and you are normally given the option of signing your receipt instead of using a required PIN number (you can enter your PIN number if your prefer). You also typically don’t have to show a picture ID.

Which is Better?
Maybe you still don’t see much of a difference, besides where the money comes from and when you have to pay up. So which o­ne is better to use? It depends upon how careful you are with your card and what you are using the card for.

The features that make debit cards convenient–instant access to your money, lack of a required PIN number, and not having to drag out your photo ID when you use it–make fraud that much easier. Unless reported quickly, theft of your debit card can quickly devastate your bank account. This is where you begin to see a difference between credit and debit cards. Here’s why:

Credit card companies are held to strict liability laws; the law limits consumer liability for credit card fraud to $50 and many credit cards, including all Visa and MasterCard credit cards, now have zero liability policies (your liability for unauthorized transactions is $0). In addition, if you notice suspicious charges o­n your credit card statement such as double billing or an incorrect charge, the credit card company is obligated to investigate if you send in a written request within 60 days.

For debit card fraud, your liability is $50 if you notify the bank within two days of noticing the fraudulent charges. After two days, your liability increases to $500, and up to your entire account balance after 60 days. So if you notice that your card is missing within two days and report it, you can o­nly be made to pay up to $50. However if you report the theft after two days, you can be held responsible for paying for purchases or charges that you didn’t make. Although many banks have started to implement voluntary plans to limit customer’s liability to $50, there is no federal law regarding this issue. Finally, Visa and MasterCard do extend limited zero liability protection to debit cards branded with the Visa or MasterCard logo, but this protection has certain restrictions.

The key to protecting yourself when you suspect that your stuff has been stolen is acting fast! The Federal Trade Commission offers an excellent resource that can help you respond quickly in case your wallet or purse is stolen.

In addition to stricter liability laws, credit cards also offer more consumer protection o­n purchases made. Use credit cards for very large or fragile purchases, and for objects that will be delivered to your home after the purchase; this gives you added insurance in case the purchase is damaged in route.

One final advantage of credit cards is that they are a great tool for consumers that are seeking to establish or reestablish an attractive credit history. Responsible credit card usage can improve o­ne’s credit rating. Credit cards typically report account activity to at least o­ne of the three major credit bureaus o­n a monthly basis. An attractive credit rating will improve your chances of obtaining favorable credit terms (low interest rates, low fees, etc.). for automobile loans, mortgages, personal loans, etc.

Discipline Yourself
One pitfall that many consumers fall into is not keeping up with their debit transactions. This is like writing checks and not recording your purchases–you may end up trying to spend money that you don’t have! If you’re not good at recording your check transactions, you will need to discipline yourself to keep up with your transaction receipts.

Probably the main thing to remember if you are using a debit card regularly is that it’s not just a card; it’s ready access to your money. Be as careful with it as you would with your wallet if it had the contents of your entire bank account in it. The National Consumers League is a good resource if you would like even more information o­n debit cards. It offers information and tips for responsible use of debit cards, including record keeping and theft report.

Now that I have learned all about debit, maybe I’ll break my habit and dare to use my debit card now. But I’ll probably take my checkbook just in case!

How do you teach your child about money, before they “invest” it all into the current fad? Believe it or not, the solution may be a credit card.

Ahhh, school days. Reading, writing, and rooting for your school football team. Hanging out at the mall and surfing the web. Ok, so things have changed a little since you were in school. The current generation of teenagers now has more purchasing power than ever, and companies are spending millions of dollars to get your teen to pay attention to their products.

If you’re like most American families, your teenager has some sort of income, be it an allowance or a job. The problem: how do you teach your child about money, before they “invest” it all into the current fad? Believe it or not, the solution may be a credit card.

Once upon a time, giving a teenager a credit card was laughable, if not impossible. However, now there are several cards available just for teens. Options such as parental control and digital allowances serve to let parents participate in their teen’s initial journey through the world of credit. Although the thought of your teenager with a credit card in their back pocket might cause you to break into a cold sweat, there are some good reasons why this could be a great educational experience for your child, as well as yourself.

Money Management 101 The sooner your teen learns about the reality of credit, the better. Teach your teen basic lessons about how credit works, including how interest rates can quickly double or even triple the original price of an item. Rather than giving your teen free reign to purchase anything he or she wants, help your teen establish a budget and a sense of financial responsibility. Another good source is the National Institute for Consumer Education, which provides easy to read mini-lessons for students about credit.

Foundations for Good Credit By providing your teen with early money management skills, you set them up for an easy transition into the world of adult credit. A recent survey of adults sponsored by the InCharge Institute of America highlights the need for education. About half of the respondents claim that they were never taught about credit by their parents. When teens leave home for college or work, they will be bombarded with credit card offers. Incoming freshmen are expected to amass an average $1,500 in credit card debt according to Nellie Mae, the largest non-profit provider of education loan funds in the U.S. (more info here). A sound knowledge of credit will make your teen aware of the potential pitfalls of “too good to resist” credit offers. An early start can also help your teen to establish good credit, giving him or her countless advantages when they’re o­n their own looking to purchase a car or a house.

Security Another advantage is the feeling of security you have in knowing that your teen has a back up in emergency situations. Using plastic is also safer than using cash. Furthermore, in the event that your teen’s card is lost or stolen, you’ll pay nothing for unauthorized purchases.

Options There are many card options available to teens. During the summer of 2001, Visa introduced a new product geared toward teens that is called the Visa Buxx card. The Buxx card has sparked a great deal of discussion and debate about the merits of allowing teens access to electronic forms of payment. The card is basically a prepaid debit card, according to Michelle Singletary, a personal finance writer with the Washington Post. Visa has embarked o­n a marketing campaign to promote the Buxx card and bills the card as a “parent-controlled reloadable payment card”. The card is already being issued by many large banks and may come with an annual fee and transaction fees. Fees vary from bank to bank.

Another option for parents that have a higher risk tolerance level is to co-sign for a low-limit unsecured credit card (aka a “real credit card”). If you are brave enough to choose this option, make sure you limit your risk by asking for a very low limit o­n the card, such as a $200 to $300 limit. Please bear in mind that this option will affect your credit rating.

Should you decide that it’s time to teach your child the golden rules about credit, you will want to investigate the types of cards available. This will help you match your teen with a card that meets his – and your- needs. With thorough research and responsible teaching, you can make your teen’s entrance into the financial world smooth, fun, and successful. Go team!

Taxpayers that expect to owe the IRS often wait “to the last minute” to file their tax return. In an effort to make the payment process more convenient, the IRS introduced a credit card payment option last year.

April 15th (actually the 17th this year) is dreaded by millions of Americans. Taxpayers that expect to owe the IRS often wait “to the last minute” to file their tax return. In an effort to make the payment process more convenient, the IRS introduced a credit card payment option last year. This option was an instant hit, according to Libby Wells of Bankrate.com, and resulted in filers charging $147 million o­n American Express, Discover, and Mastercard. This year the IRS is even allowing extension payments, partial payments, and estimated tax payments. While the program has generated much interest, there are some points that cardholders should consider before jumping o­n the tax payment bandwagon…

* Whether you pay over the phone (1-888-2PAY-TAX) or electronically, utilizing Intuit’s TurboTax or MacInTax’s electronic filing software, you can expect to pay a fairly hefty convenience fee for either option. The phone option will result in a fee of from 2.5% to 3.0% based o­n the amount of tax due. The electronic option will result in a convenience fee of 1.75%. For example, a 3.0% fee for a $2,000 tax payment translates into a fee of $60.

* Many cardholders have viewed the credit card payment option as a clever way to earn frequent flier miles or cash incentives. Official Payments Corporation, the developers of 1-888-2PAY-TAX, proclaim that cardholders can “make their tax payments work for them”. While you can earn miles and cash rebates by charging your tax payment (the payment shows up as a purchase o­n your card, instead of a cash advance), the penalty for doing so usually outweighs any rewards. Carefully compare the reward that you can earn by charging your payment to the convenience fee that will be levied. Cardratings.com calculators are a great tool for this type of comparison.

* If you anticipate having difficulty making your payment, consider the installment payment plan option offered by the IRS. This option, while not available to everyone, allows taxpayers to “spread their tax payments out over a desired period of time”, typically five years or less. While there is a $43 set up fee, the interest rate is initially o­nly 8%. You can learn more about this payment option by clicking here.

* Despite potential pitfalls, charging your tax payment is an attractive option for some taxpayers. The two main attractions are flexibility and convenience. The ability to charge estimated taxes, partial payments, and extension payments is a prime example of the growing flexibility and of the program. Moreover, not all taxpayers qualify for the installment payment option.

* There are many guidelines and restrictions governing credit card payments and cardholders should be cognizant of this. We suggest that cardholders interested in charging their tax payment review the program in detail by visiting the IRS o­nline. Goodluck!