Credit Cards

Find out your rights when it comes to credit cards and how to choose the right one.

Choose a Credit Card

When applying for credit cards, it’s important to shop around. There are several credit cards with various features, but there is no one single best card. When you’re trying to find the credit card that best suits your needs, consider these factors:

  • Annual Percentage Rate (APR) - The APR is a measure of the cost of credit, expressed as a yearly interest rate.  If the interest rate is variable, you should ask how it is determined and when it can change.
  • Periodic Rate - This is the interest rate used to determine the finance charge on your balance each billing period.
  • Annual Fee - While some credit 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 in full before finance charges start. Without this period, you may have to pay interest from the date you use your card or when the purchase is posted to your account.
  • Finance Charges - Most lenders calculate finance charges using an average daily account balance: the average of what you owed each day in the billing cycle. Look for offers that use an adjusted balance, which subtracts your monthly payment from your beginning balance. Avoid offers that use the previous balance in calculating what you owe; this method has the highest finance charge. Also, find out if there is a minimum finance charge.
  • Other Fees - Are there fees if 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.
  • Security Features - Does the card allow you to switch it on or off, receive fraud alerts, or text messages immediately after purchases?  
  • Chip and PIN - Does the card issuer offer chip and PIN security features that use an embedded strip instead of a magnetic strip? You may need this card type if you travel internationally.

The Fair Credit and Charge Card Disclosure Act requires credit and charge card issuers to include this information on credit applications. 

Credit Card Guides

For further information on choosing a credit card, visit:

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Credit Card Laws

Credit card regulation protects you from unfair practices, gives you the right to dispute charges on your credit card, and allows you to file a complaint with your credit card company.

Credit Cardholders Rights

Often called the Credit Cardholders Bill of Rights, the Credit CARD Act protects you in two ways:

  • Fairness - By prohibiting certain practices that are unfair or abusive, such as hiking up the rate on an existing balance, or allowing you to go overlimit and then imposing an overlimit fee
  • Transparency - Making the rates and fees on credit cards more transparent, so that you can understand how much you are paying for your credit card

Dispute a Credit Card Charge

Under the Fair Credit Billing Act, you have the right to dispute charges on your credit card that you didn't make or are incorrect, or for goods or services you didn't receive. To dispute a charge, follow these guidelines:

  • Send a letter to the creditor within 60 days of the postmark 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.
  • To ensure it is received, send your letter by certified mail with a return receipt requested.
  • The creditor or card issuer must acknowledge your letter in writing within 30 days of receiving it and conduct an investigation within 90 days. You do not have to pay the amount in dispute during the investigation.
  • If there was an error, the creditor must credit your account and remove any fees.
  • If the bill is correct, you must be told in writing what you owe and why. You must pay it along with any related finance charges.

File a Complaint

To complain about a credit card company, call the number on the back of your card or contact the CFPB. If you fail to resolve the issue, ask for the name, address, and phone number of the card company's regulatory agency. 

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Credit Card Protections

Did you know that your credit card may offer you other protections that are not typically advertised?

When using your credit card for travel purchases, your credit card issuer may offer you travel insurance in certain situations:

  • Your trip is delayed.
  • You have to cancel your trip because you or a family member becomes ill.
  • Your luggage gets lost during travel.

If you rent a car, you may be offered auto insurance coverage as part of the rental. Some credit card networks even offer return assistance programs that extend the window for returning unused merchandise. Keep in mind: the rules vary between cards and the issuers.

Credit Card Agreement Database

Check out the Consumer Financial Protection Bureau’s (CFPB) credit card agreement database to find your credit card agreement and learn which additional protections you have. 

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Credit Card Resources

Credit card resources can help you learn important tips and security information, find your card agreement, and file a complaint. 

Credit Card Tips

To find tips on using and getting the most from your credit card, refer to these resources:

  • Get information from the Federal Trade Commission (FTC) about how to use a credit card. Topics include refunds, errors, disputes, unauthorized charges, and security.  
  • The Federal Reserve Board explains how to get the most from your credit card. This includes how to avoid unnecessary fees and keep track of changes in the terms of your account.

Chip and PIN Technology

Some card issuers have introduced chip and PIN security features on cards that contain an embedded strip rather than a magnetic strip and are protected by a personal identification number (PIN). Chip cards are based on a global card payment standard called EMV (Europay, MasterCard, and Visa), currently used in more than 80 countries around the world.   

Beginning on October 1, 2015, merchants and businesses in the U.S. will be required to add in-store technology and processing systems so that you can make a purchase using a chip card. You may already need this type of card if you travel internationally since magnetic strip credit cards are not accepted in some countries. 

Credit Card Agreement Database and Sample Agreement

A credit card agreement covers the structure, features, terms and conditions of a credit card.

File a Complaint

For problems with your credit card company, call the number on the back of your card or try to resolve it with the Consumer Financial Protection Bureau (CFPB).

  • Submit a complaint to the CFPB about problems with managing you credit card account, billing disputes, changes to your APR, fees, unauthorized transactions, and many other issues. If you fail to resolve the problem, ask for the name, address, and phone number of the card company's regulatory agency. 

 

 

 

   

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Last Updated: June 06, 2017

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