Credit cards are a type of loan and when you borrow money from the issuing bank you agree to terms and conditions, such as when you will pay and how much you will pay. Many credit cards use "fancy" offers and language to market to consumers. It is vital to read and understand the terms they are offering before you sign any forms. (See Risk Management - Contracts for more information on how to read a contract).
A good first step to developing credit card skills is to understand what the terminology means. In the link below, the Federal Reserve Board provides information about what certain information by law, must be stated in the disclosure box on any credit card solicitations or applications.
Your credit card statement should accurately reflect the terms of your credit card (loan). You should review your monthly statements to ensure it is accurate, and that there are no errors. The mouseover feature in the tool below explains how to read your credit card statement.
An amount charged that is different from the actual amount.
A charge for something that was delivered and you did not accept.
A charge for something not delivered per the agreement.
Payments not credited to your account.
According to The Federal Reserve Board website, if you think your credit card bill has an error, take the following steps:
Write to the credit card company within 60 days from the billing statement date with the error.
Provide the company in writing:
- Your name and account number;
- That you believe the bill contains an error;
- Why you believe it’s wrong, and;
- The date and amount of the error (the “disputed amount”).
You do not have to pay the “disputed amount” or any minimum payments or finance charges that apply to it.
But you should pay all other items on the bill.
Mail your dispute to the address for “billing inquiries” listed on the bill.
If there is an error, you will not have to pay any finance charges on the disputed amount and your account must be corrected.
If there is no error, the credit card company must send you an explanation and a statement of the amount you owe. The amount will include any finance charges or other charges that accumulated while you were questioning the bill.
You have certain rights a credit card consumer. The federal agency which monitors consumer laws is the Federal Trade Commission. The state agency which oversees consumer credit card laws is the Maryland Attorney General's Office.
For each of the following situations, hold your mouse over an answer to reveal your federally enforced legal rights.
A hospital mistakenly sent your bill to your last address. You moved five years ago so the bill was not forwarded to your current address. A debt collector calls you to ask you to pay the bill. You reply that you have no idea to what bill he is referring.
The debt collector will not share any information with you and simply repeats, "Just pay your bills."
Do you have to pay the money without knowing which bill was overdue?
Ann, a 70 year old depending on Social Security, applies for a credit card at a national store and is denied the card. When she asks why the card was denied the store says it is because of her dependence on Social Security.
Can credit be denied due to her use of a public assistance program?
You suspect there is a mistake on your credit card bill. This is a charge you don't remember making. You write the card issuer a letter disputing the charge. The credit issuer charges you interest on the amount you have not paid and are disputing.
Can they charge you interest on an amount you are disputing?
Before signing the application for a car loan you ask to be shown the total cost of your loan including the finance costs (interest). The salesman refuses and tells you it's just a number and that the loan will be paid off in just 60 months.
This site is brought to you by Towson University's Financial Services, DECO EEOL and the Maryland Coalition for Financial Literacy with a grant from the BRAC Higher Education Investment Fund, administered by the Maryland Higher Education Commission.
If you borrow $1,000 from a credit card lender, and have a 10% interest rate, and only pay the 2% monthly minimum payment, it will take you:
• 10.4 years to pay off this debt.
If you pay this debt off at a 10% rate (pay more than required minimum payment ), it will only take you:
The Credit Card Accountability Responsibility and Disclosure (C.A.R.D.) Act of 2009 will provide many protections from abusive credit card practices. Unless otherwise noted, these provisions are effective Feb. 22, 2010.