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Consumer Credit and Credit Cards FAQ



Frequently Asked Questions about Credit cards and Consumer Credit

This FAQ about Credit cards and Consumer Credit was compiled and written by adams@spss.com (Steve Adams) with numerous contributions by others.

Many questions are frequently asked on misc.consumers. This FAQ tries to answer questions about one area, namely consumer credit. (Even within that area, there's so much information that the FAQ is specialized in credit cards and credit reports.) I hope others will put together similar lists in other areas. Such lists can be forwarded to me for posting and maintenance.

This FAQ (Frequently Asked Questions) list should be a repository of the canonical "best" answers. If you know a better answer or a change that improves an answer, please tell me! (Use email, please. Traffic in this group is high, and I might easily miss a relevant posted article.)

Steve Adams, SPSS, Inc., Chicago, IL, USA adams@spss.com

Part I: Intro

-001. Disclaimers
The information presented here comes from others' research and ...
-002. Other resources
The Federal Reserve System publishes a series of pamphlets that ...
-003. General net usage
Many FAQs on most newsgroups are really about how to use the net, ...
-004. Acknowledgements
I want to thank the many misc.consumers readers who've sent ...

Part II: Credit cards, other cards

-100. Credit cards, other cards
EDITOR's NOTE: I rarely use credit cards, but did use them ...
-101. What kinds of credit cards are there?
- bank cards, issued by banks: Visa, MasterCard, and Discover;...
-102. What is an affinity card?
An affinity card carries the logo of an organization in addition ...
-103. Is MasterCard better than Visa, or vice versa? What about American Express, Diners Club, etc.?
In the U.S., almost any establishment that takes MasterCard ...
-104. Why does my neighbor's MasterCard or Visa have different rates and fees from mine?
MasterCard and Visa rates are set independently by the banks ...
-105. What is a secured card?
Secured cards require you to make a bank deposit up front. ...
-106. What is a guaranteed card?
It's another name for a secured card, typically offered through ...
-107. What is an unsecured card?
You may not often hear this term. Technically, a regular card ...
-108. What is a debit card?
As its name implies, it is not a credit card. Instead of running ...
-109. How does an ATM card differ from a debit card?
An ATM (automatic teller machine) card is a form of debit card, ...
-110. Where can I find information about telephone credit cards?
Subscribe to the newsgroup comp.dcom.telecom and watch for ...
-111. What is a PIN, and what good is it?
A PIN is a password that goes with your card that allows you to ...

Part III: Good deals, bad deals

-200. Good deals, bad deals
This section guides you to the questions you should ask yourself ...
-201. In general, what should I look for in a credit card?
There are three principal features to the card itself: ...
-202. Do I want a fixed-rate or floating-rate (variable-rate) credit card?
The interest rate is the rate charged on purchases and cash ...
-203. How do annual credit card fees work?
The annual fee is, well, a fee that the card issuer bills to ...
-204. Can I get the annual credit card fee waived at renewal time?
Many lenders have secret programs in effect where if you ask ...
-205. What about credit card application fees?
These are extremely uncommon. Though such fees are legal, look ...
-206. What other credit card fees should I be concerned about?
Many cards assess an over-limit fee if you charge something ...
-207. Why is a grace period important?
The grace period is the time after the billing date that you have ...
-208. Why is a discount better than a rebate?
Rebates are a percentage refund on your purchases, either by ...
-209. What else should I watch out for in credit cards with rebates?
First, when will the rebate be issued, at the end of the month or ...
-210. How do I evaluate a secured card?
Use the same criteria as for any other card. Ask the bank ...
-211. Shouldn't I get as many credit cards as I can?
Not necessarily. The more cards you have, the fatter your wallet ...
-212. Why would I want more than one of the same kind of credit card?
Some people like having, say, two MasterCards or two Visas. I don'...
-213. Is a gold credit card worth the higher annual fee?
Gold cards typically carry some of these perks: collision ...
-214. I was mailed a solicitation for a Visa or MasterCard that accrues frequent-flyer miles on my purchases. Is this a good thing?
It may or may not be. Does the airline fly to places you ...
-215. I belong to the Benevolent Order of Mumble, and they mailed me a credit-card solicitation. It would be a MasterCard with their logo on it. Is this a good deal?
This is an affinity card; see section 1, Credit cards, ...
-217. I got a call (or saw an ad) inviting me to call a 900 number for a "guaranteed" MasterCard or Visa. Is this a good deal?
No. These offers require you to pay up front either for a ...
-218. What should I watch out for in a corporate credit card?
A corporate card is an ordinary card, typically American ...
-219. I saw an ad for a credit card I've never heard of. What's the story?
Be careful when applying for credit. Some companies ...
-220. I got an application for a credit card that didn't state interest rate and fees. Is this legal?
No. The U.S. Fair Credit and Charge Card Disclosure Act ...

Part IV: Lists of good cards

-300. Lists of Good Credit Cards
This FAQ list can't tell you which card is best for you. Your ...
-301. Where are lists of the best credit cards?
No one card is best for everyone. Are you looking for a card ...
-302. I don't want to look up magazines. Isn't there an easier way to find the best credit card ?
First, don't post a request to the net. You may get some replies,...
-303. I understand why low rates or no annual fees are important. Why would I care about which banks issue the most credit cards?
A bank that issues lots of cards may be less choosy than a bank ...
-304. Okay, I know that First Mumble Bank of Fubar has a credit card I want to apply for. How do I get in touch?
First, don't post a request to the net for their phone number. ...

Part V: When you buy with a credit card

-400. When to buy with a credit card?
Murphy's Law has free play in credit matters. Here are some ...
-401. Is it better to pay by check or by credit card, as a rule?
In general, it's better to use a credit card. When you pay ...
-402. When I make a purchase with credit card, can they ask for my address or phone number?
This is a complicated question. There are two possible sources ...
-403. If it's against the rules to ask for my address of phone number, when purchasing with credit card, why do merchants insist on address or phone number?
Don't rule out ignorance: many merchants don't know the rules....
-404. What should I do when asked for personal information I don't want to give when purchasing with credit card?
See also Is there any official document and Where should I ...
-405. I tried to charge my credit card a $10 item but the merchant pointed to a sign "minimum charge $20." Is this valid?
Never for Visa and MasterCard; generally not for American Express....
-406. Can the merchant charge credit-card users more than cash customers for the same item?
In a word, maybe. In a few more words, probably, if the ...
-407. I made a hotel reservation, and guaranteed it with my credit card. When I showed up, the hotel denied my reservation. Have I any recourse?
That depends. Most hotels and motels (but not all) subscribe to ...
-408. I paid by check, and the merchant wrote my credit-card number on the back. If the check bounces, can the merchant charge my card?
The answer to this one boils down to There are two kinds ...
-409. Can mail-order merchants charge my credit card before they ship?
According to Janet Hug of Visa USA, a merchant is not permitted ...
-410. Is there any official document that I can take with me to show merchants who violate the credit card rules?
Yes, the Bankcard Holders of America includes a wallet-...
-411. Where should I report merchants who break the credit card usage rules?
If merchants violate any of the above laws, you can report them ...
-412. Does my credit card payment have to reach the lender by the "due date" on the bill, or is it enough if I just mail it by the due date?
That's a good question, and the answer varies. The Uniform Commer-...
-413. I have a checking or savings account at the same bank as my Visa or MasterCard. Can the bank freeze my account or take money from it if I miss a payment on my credit card bill?
Probably yes. You should check your cardholder agreement. ...

Part VI: Billing errors and overcharges

-500. Billing errors and overcharges
The U.S. Fair Credit Billing Act governs credit billing, and gives ...
-501. What kind of problems am I protected against when paying with a bank credit card?
The Fair Credit Billing Act protects you from honest errors ...
-502. There's an error on my credit card bill. What should I do?
The instructions are printed on your bill, probably on the back....
-503. I got ripped off by the merchant when paying with credit card. What should I do?
This is any situation listed at the beginning of this section,...
-504. Exactly which credit card purchases qualify under the Fair Credit Billing Act?
You are protected if all of the following are true:...
-505. Will the bank get involved right away?
No. Under the law, first you must try in good faith to ...
-506. What does resolving a credit card problem "in good faith" mean?
In good faith is not defined in the law, but in practice it ...
-507. Any other hints for dealing with a problem merchant (credit card)?
Most important, remember that the person you are talking to ...
-508. I tried in good faith, but the merchant won't budge. Can the bank help?
Yes, and in fact the law says the bank _must_ help. (The banks ...
-509. What does the bank do when I ask for a chargeback?
The bank will credit your account and charge the amount back to ...
-510. What happens to finance charges on the disputed amount?
You don't have to pay them while the bank is investigating....
-511. What if I paid my credit card bill in full before I noticed a problem?
Strictly speaking, the Fair Credit Billing Act says you may not ...
-512. How do I avoid problems with unauthorized credit card charges?
From the Wall Street Journal, Friday, July 17, page ...

Part VII: Miscellaneous credit-card stuff/Fair Debt Collection Act

-601. What do the digits in my credit-card number mean?
ANSI Standard X4.13-1983 answers this question for most ...
-602. I lost my credit card, or it was stolen. What should I do?
Call the issuer right away. Somewhere in the papers that came ...
-603. What is the 800 number for customer service?
For Discover, it's (800) 347-2683, a/k/a 800-DISCOVEr....
-604. Why was I turned down for a credit card?
See sections 7, 8, and 9 in part 3 of this list, which deal ...
-605. Should I give my credit-card number over the phone?
One big question is: did you call them or did they call you? ...
-606. What may creditors do? Fair Debt Collection Act.
Credit-card debt, like any other debt, does not give your ...

Part VIII: Credit reports--in general

-700. Credit bureaus and your credit rating
The U.S. Fair Credit Reporting Act of 1971 governs credit bureaus....
-701. What is "the credit bureau"?
There are three big ones: TRW, Equifax, and Trans Union, all ...
-702. Who assigns my credit rating?
You don't have a credit rating, as such. Each credit ...
-703. How long does it take for an event (positive or negative) to show up on my credit report?
Suppose you've just paid off a large loan and you're applying for ...
-704. How does a lender decide whether to grant a loan?
When you apply for a mortgage, credit card, or other loans, the ...
-705. Should I apply for as many credit cards and charge accounts as possible, even if I won't use most of them right away?
This may create a problem -- actually, two problems....
-706. I was refused a loan or credit card. What can I do?
If the lender's decision was based on a report from a credit bureau,...
-707. One lender refused my loan, but another one said it was fine. How can this be?
There are two possible reasons. First, they may have been ...
-708. I'm planning to apply for a loan, and I'd like to know up front that my credit is clean. What can I do?
If you can, find out in advance which credit bureau your lender ...
-709. How long do negative items stay on my report?
Personal bankruptcies (ie Chapter 7) may be reported for ten years; ...

Part IX: Getting and reading your credit report

-801. How much does my credit report cost?
There are no Federal laws limiting the price, though some state ...
-802. Can I get a free copy of my own credit report?
You can get a free copy of a report if the lender used that ...
-803. Can I phone in my request?
Here is current status as of 2 May 1992:...
-804. Where do I mail my request for a credit report?
- Equifax Information Service Center, P O Box 105873, Atlanta ...
-805. Can I get credit info online?
Yes. There is a service which will provide such ...
-806. What information should I provide when requesting a credit report?
If you have a letter denying you credit, employment, or ...
-807. Help! What are all those codes on my credit report?
There should be a separate key or explanation mailed with ...
-808. What are "inquiries" on my credit report?
Whenever you or anyone else asks for a copy of your credit report,...

Part X: Fixing your credit report

-901. I've got a copy of my credit report, and it's wrong. What now?
First, take a deep breath. The Federal Trade Commission says ...
-902. What exactly will the credit bureau do with my correction?
Normally, they send a message to the credit grantor that ...
-903. My credit report shows adverse information, but I have a letter from the lender saying that information is false. Can I submit this letter to the credit bureau?
The answer is yes for TRW and probably not for Equifax and ...
-904. The credit bureau ignored my correction -- or it says an item is right but I can prove it's wrong. What can I do?
There are several possibilities....
-905. My credit report shows transactions from other people with the same name or similar names. How can I get it cleaned up?
See the preceding Q's in this section. You may also have to go ...
-906. My spouse and I had joint credit accounts, and s/he ran up a lot of debts. Now we're divorced, and I want my ex's debts off my report.
Sorry. If an account is in two names, both are responsible ...
-907. I got in trouble and ran up a lot of debts I couldn't pay, and now my credit report looks awful. How can I get credit?
Well, lenders grant credit based on how likely they think you are ...
-908. Are "credit repair" agencies legitimate?
Most of them operate within the law but don't do anything for ...
-909. Is "Credit File Segregation" legitimate?
The deal is this: you apply for an Employer ID number, which ...









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