Benefits with Commonwealth of Virginia Members

Credit Cards

A credit card lets you buy goods and services on credit, with the promise that you will pay the issuer the amount you borrowed. Having a credit card is sometimes necessary to make travel reservations and create online accounts. Some companies, in fact, accept only credit or debit card payments. There are many types of credit cards with various features, but there is no one best credit card. The card you choose depends on how you plan to use it. Are you going to use it for everyday purchases or larger purchases? Do you plan to pay off your balance each month?

When you apply for a credit card, consider the following:

• Annual Percentage Rate (APR) — If the interest rate is variable, how is it determined, and when can it change?
• Periodic rate — This is the interest rate used to determine the finance charge on your balance each billing period.
• Annual fee — While some cards have no annual fee, others expect you to pay an amount each year for being a cardholder.
• Rewards programs — Can you earn points for flights, hotel stays and gift certificates to your favorite retailers? Use online tools to find the card that offers the best rewards for you.
• Grace period — This is the number of days you have to pay your bill before finance charges start. Without this period, you may have to pay interest from the date you use your card or the date the purchase is posted to your account.
• Finance charges — Most lenders calculate finance charges using an average daily account balance, which is the average of what you owed each day in the billing cycle. Look for offers that use an adjusted balance, which subtracts your payment from your beginning balance. This method usually has the lowest finance charges. Check whether there is a minimum finance charge.
• Other fees — Ask about fees when you get a cash advance, make a late payment or go over your credit limit. Some credit card companies also charge a monthly fee. Be careful: Sometimes companies may also try to upsell by offering other services such as credit protection, insurance or debt coverage.
• Terms and conditions — Read the agreement before you apply for the card to make sure that you agree with the requirements, such as mandatory arbitration or repossession clauses.
• Balance carry-over — Charge cards require you to pay the entire amount due at the end of the statement period. Typical credit cards allow you to carry a balance.
• Security features — Does the card issuer offer fraud alerts or text messages immediately after purchases, or let you turn your card on and off?
• Chip and PIN — Does the card issuer offer chip-and-PIN security features that rely on an embedded chip instead of the magnetic strip? You may need this type of card if you travel internationally.

Chip-and-PIN Credit Cards

Chip-and-PIN credit cards offer you additional fraud protections. A chip-and-PIN card has an embedded microchip, with your account information stored on it. This chip makes it difficult for a counterfeiter to produce a fake credit card using your payment information. These cards also use unique one-time codes that are sent from the point-of-sale terminal in a store to the credit card approval system.

The steps to make a purchase in a store are different with a chip-and-PIN card than with traditional credit cards. Instead of sliding your credit card, you insert it into the point-of-sale terminal for a few seconds, then enter your PIN. There are no changes in the process if you shop online or at retailers that haven't installed chip-and-PIN terminals.

Even though chip-and-PIN credit cards have more security features, you still need to secure your credit cards. Check your statements regularly, don't share your PIN, and report suspected fraud to your credit card issuer.

The Fair Credit and Charge Card Disclosure Act requires credit and charge card issuers to include the interest rates, terms and conditions, and fees on credit applications. You can also do your own research. There are many websites available to help you compare credit cards; some provide free credit card tips, reviews of credit cards, and calculators.

The Consumer Financial Protection Bureau (CFPB) provides information on selecting a credit card appropriate for your needs. For more information, visit http://www.consumerfinance.gov/.

Lost and Stolen Credit Cards

Immediately call the card issuer when you suspect a credit or charge card has been lost or stolen. Once you report the loss or theft of a card, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.

Complaints

Call the number on the back of your card to complain about a problem with your credit card company. If that doesn't work, contact the CFPB (http://www.consumerfinance.gov/). If you fail to resolve the issue, ask for the name, address and phone number of the card company's regulatory agency. Contact the CFPB to complain about a credit bureau. For complaints about a department store that offers credit, or other Federal Deposit Insurance Corporation (FDIC)–insured financial institution, write to the agency's Consumer Response Center: https://www.fdic.gov/consumers/assistance/filecomplaint.html.

Credit Card Billing Disputes

Under the Fair Credit Billing Act, you have the right to dispute charges on your credit card that you did not make, are incorrect or are for goods or services you did not receive. Do the following to dispute these charges:

• Send a letter to the creditor within 60 days of the statement date of the bill with the disputed charge.
• Include your name and account number, the date and amount of the disputed charge, and a complete explanation of why you are disputing the charge.
• Send your letter by certified mail, with a return receipt requested to make sure it is received.

The creditor or card issuer must do the following:

• Acknowledge your letter in writing within 30 days of receiving it, and conduct an investigation within 90 days of receiving your letter. You do not have to pay the amount in dispute during the investigation.
• Credit your account and remove any fees, if there was an error.
• Tell you, in writing, what you owe and why, if the bill is correct. You must then pay it, along with any related finance charges.

If you do not agree with the creditor's decision, file a complaint with the CFPB. You may also file a lawsuit against the creditor, unless your credit card agreement includes a mandatory arbitration clause. (Find out what this means here: http://www.creditinfocenter.com/cards/credit-card-arbitration.shtml.)