published Wednesday, May 29th, 2013

Personal Finance: Credit card facts you may not know

Chris Hopkins

Credit cards are so ubiquitous today that we probably think we know all about them. But here are a few of the quirkier features of which you may not be aware, courtesy of our friends at Bankrate.com.

Did you know that card technology is the United States is far behind the rest of the world? While we still depend upon the 45-year-old-magnetic stripe, most other countries have adopted EMV microchip cards (also called chip and pin cards). While the cards look the same, your existing magnetic striped plastic will not be accepted in many places overseas, particularly at automated kiosks like train and bus ticket dispensers. If you are planning foreign travel, contact your issuers before you depart and request EMV versions of the cards you intend to use.

Banks are depending to a greater degree upon algorithms to detect potential fraud, especially zeroing in on geographic changes in the pattern of card usage like purchases outside the United States. You may find your credit suspended by the issuer's computer program until you satisfy them that you are the legitimate user. It is a good idea to contact your card companies in advance and let them know your travel plans to avoid potential inconvenience when you arrive.

Thanks to a 2009 law known as the CARD act, consumers are now better protected from retroactive rate increases. Issuers must wait at least one year from date of issue and are required to give 45 days notice in advance of pending interest rate hikes to allow customers sufficient time to shop for a better deal. However, if a cardholder is unable to move the balance to another lender, the CARD act places limits on how the bank can apply the higher charges. Rate increases apply only to new purchases and cannot be applied to existing balances except in the case of teaser rates, variable rate cards, or in the event a payment is 60 days late.

You have the right to reject the rate increase. In this event, you must stop using the card (any further use constitutes your acceptance of the new rate). And the bank must give you at least five years to pay down the balance subject to the original rate or allow you to double the minimum monthly payment until the debt is eliminated.

Finally, cardholders have a modicum of protection from unsatisfactory purchases under the Fair Credit Billing Act. If a product or service is defective or of inferior quality and you have not been able to resolve the dispute with the merchant, your credit card issuer is required to provide limited relief. If the purchase exceeded $50 and was made in your home state or within 100 miles of our home, the card company assumes the responsibility for resolving the complaint. If unsuccessful, the bank may charge back the purchase to the seller and refund the price to you. The procedure to follow is available at www.consumer.ftc.gov.

Get answers to financial questions on Wednesdays from our columnists who work in the financial services industry. Christopher A. Hopkins CFA, is a vice president at Barnett & Co. Submit questions to his attention by writing to Business Editor Dave Flessner, Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN 37401-1447.

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