You should be proactive with your credit card management. One of my financial coach clients shared a story where they called credit card customer service to dispute the reversal of a Sun Pass charge that was legitimate but flagged as a fraud. That’s Florida’s toll road payment system. They found out when they attempted to pay for gas with the card. The gas station denied the card for payment. They received no e-mails or texts. No phone call that there was a problem. A denied purchase was the first feedback they received. They went to check the account online and they could not access the account. No reason was given. They called the 1-800 number on the website and got an automated system. When they finally got through to customer service, they found the charge in question were two weeks old.

None of the charges were fraudulent. The result however, is that the card was cancelled. Wait for new cards to arrive in the mail.

Take Away: Please make sure you have a backup plan in case your credit card is declined. You may have to carry a second backup credit card.

The easiest way to use a credit card is to only purchase items we can afford to pay for by the end of the credit card’s billing cycle. This allows us to use the card's purchasing power without paying interest to the bank. If you are currently carrying a balance on your credit card account, fear not, we will discuss how to fix that problem.

In addition, you must be careful about credit card charge errors.

Just as important as reading the credit card agreement is to read your credit card statement at least monthly. It may be wiser to look at the statement weekly until you have established a legitimate system of managing and monitoring your accounts.

By reading my credit card statements regularly, I found: If ignored, the vendor would happily charge my credit card and receive my money for nothing.

a.     I opened my Discover statement. This account has a small balance left over from a zero-interest balance transfer I made about 2 years ago. I paid the difference between the statement balance and the payoff balance. I noticed that now I have an interest charge on the statement. That’s right, the balance transfer offer expired. Hmm. Let’s check the interest rate. 21%. Really? Paying that off as soon as possible.

b.     Post COVID-19 note: At the end of January 2020, Discover sent me a letter that my account was closed for non-use. Our takeaway is that you should charge something small on a zero balance card to keep it active. I lost that credit line. Not a huge deal, but closed credit accounts can cause your FICO credit score to go down due to you using a higher credit utilization ratio.

c.     I received a text alert (Ask Trim) from Citi card. $19.99 charged by an app via Apple iCloud. I started a free financial application expecting the FREE app trial to go away as they did not have my credit card number because I did not update my credit card on iCloud. Right, I shut myself off from the app store. Nope, Apple got the new number. Four weeks after the FREE trial ended, the app charged my card to reactivate. I went online and disputed the charge, and they removed it.

My point here is that credit cards are a powerful financial tool that you must manage carefully by monitoring statements monthly.

Please, we must read every credit card statement at least monthly.

Make sure you are paying for the same subscription service on two different cards. I found that I was paying for two ATT Direct TV and Adobe Acrobat accounts. I was able to convince both they were duplicate accounts, but these companies agreed to only a partial refund.

If I did not check my statement I would still be overcharged.

You must reach out to credit card customer service every time there is an issue, no matter how large or small! You must check your account statement and activity online every month!

Here’s an example of what one of my credit card statements looks like. This a credit card I got through a relationship with AAA. The credit card company is called ACG Services. This part of the statement is the Summary.

All credit cards are 0% interest if you don’t carry a balance!

What this means may not be obvious to everyone at first glance. Credit card companies charge interest when you carry a balance. If you pay the balance of the card each month you pay zero in interest. This means you pay nothing for the purchasing power created by the credit card.

However, it is still possible to pay your outstanding balance monthly, but the credit card charges you an annual fee. It’s like the price you pay for the credit card company to be friends with you. Don’t fall for this. Get a credit card with a low or no annual fee. Some credit unions excel at providing fair credit card services.

Please pay your balance in full each month.

This part of the statement is the detail of the transactions.

Please note the highlighted 2019 Total Fees and Total Interest Charges.

They are 0.00. Zero is your goal! Please note the AAA credit statement credit adjustment noted above. This card with AGC Card Services (partnered with AAA) automatically credits back your points for purchasing gas with the AAA card. More on this later in this chapter, but I use this card for only paying for gas. It doubles as my backup card in case my major card is not working. 

Side Bar: AAA

AAA is an amazing personal finance resource. AAA is an insurance company and bank besides being an automobile club. I’ll talk about this in the "Insurance Chapter," Chapter 19, but AAA sells auto, boat, RV, life, renters, flood and home insurance. AAA is a bank. Not only do they partner with banks that issue credit cards, but they also have access to savings and checking accounts, mortgage and reputable personal loans. They also have an auto buying service. I will mention AAA in Chapter Eleven, "DUI and other Legal Calamities." AAA is a leader in teaching the public about ills associated with distracted driving, aggressive driving, as well as drinking and driving.

The next statement is from the card I do the bulk of my bill paying. I paid a little interest in 2019. Did you notice the cash advance interest rate mentioned on the statement? Cash advances are 27.49% BOO! The reason I mention the Cash Advance rate here is to let you know how expensive it is to borrow cash from your credit card account. We should not use credit cards as an ATM. Banks created credit cards to assist us in buying consumer goods. Credit card companies collect fees from both you as interest in carrying balances and store merchant fees. When you borrow cash from your credit card, you pay a higher interest rate because the credit card company considers you the borrower and the merchant. Please don’t borrow cash from your credit card account un- less it is an absolute emergency! You should repay the amount as soon as possible.

Credit Card Bonus Points: Do not forget to redeem your bonus points. You should apply bonus points to your balance instead of buying something with them on impulse. I’ve worked with multiple clients who forgot this credit card reward and when discovered reduced their balance owed!

Log on to your credit card’s web- site and locate the procedure for re- deeming points.

Do Read your statement to discover if your credit card is changing its billing, interest, or “details” about your account. Credit card companies often change the rules of the game in the middle of the game. In addition, if you see unacceptable terms, I suggest you transfer to a new card. If you have bad credit, you won’t be able to apply for a new, better card.

Do you want to have a credit card? Remember, The Golden Rule says, “Those that have the Gold make the Rules”. If you don’t like the rules, then it's not mandatory that you must have a credit card. Please understand that credit cards are real debt contracts.

Beware of Grey charges: These are repetitive charges to your card that never go away even after you cancel them, such as your magazine, free trial, or software subscriptions among others. You can fight this abuse by checking your credit card statement at least monthly. Many credit cards allow you to dispute charges online by simply following the credit card companies dispute process. If you carry a zero balance, cancel any credit card that continues to bill you for disputed charges. Don’t do business with a credit card company that does not play fair. CITI card allows you to file the dispute online with no hassle. You can also contact the vendor. You should cancel that unused, unwanted, unneeded magazine and online video streaming subscription or similar liabilities now. However, consumer aware, the vendor may turn on their heavy sales pitch to convince you to keep whatever service they are selling.

I’m a bad boy! Another way to remove gray charges is to ask your credit card company to issue a new card as if you were reporting your credit card as lost or stolen. Have your card replaced with a new card that comes with a new card number. This will automatically make most grey charges disappear. Remember, though, update any accounts that you want to keep. This strategy can help you discover unnecessary charges lurking in the background.

Updated Development I have noticed recently is that subscriptions transfer from the expired card to the new card without your permission. I told you credit card companies are sneaky!

Children with credit cards to access Online Video Games

There are many stories on the Internet sharing the traps developed by the gaming industry. It is a free country. Adults are free to max out their credit card dressing their character in a video game. But what if I tell you that children under 18 play video games allowed by their parent and then rack up thousands of dollars in credit card bills by purchasing additional “In App” purchases? Parents discovered the charges of their children, which resulted in financial hardship for years. There are no safeguards with online gaming. No cashier to stop reckless spending. There is no tangible product to return to the store for a refund. Online gaming addiction is a problem. Free mobile games make most of their money from “In app” purchases from compulsive customers.

Credit Card Disputes

Credit cards have protections for its customers. If you received a good or service not as promised and the vendor does not want to remedy the situation, contact your credit card company and dispute the charge. They may send you an application to fill out to explain the product or service you purchased and the nature of your dissatisfaction. Many credit card companies give you an immediate credit of your dispute until they resolve the dispute. The vendor tells their side of the story so the process can take 30-45 days. If the credit card company agrees with you, the temporary credit becomes permanent. The letter here is an example of a credit card dispute letter regarding an auto repair that went bad. You should respond clearly, accurately and proactively when mistreated by a vendor. In the situation mentioned below, my client was told to “pound sand” by the dealership service manager. Here an independent auto mechanic verified my client’s findings. The result is that the bank refunded the charges and another letter to the Subaru corporation resulted in a cash settlement. If my client ignored this, they would have suffered a financial loss due to the cost of the unnecessary repair caused by negligence.

In a recent twist, I disputed a charge placed by an advertiser that used difficult to measure metrics to justify changing me an outrageous fee. I missed the initial charges on my card and when I found them it was past the cancellation date. The credit card company honored the initial dispute, but wait... The credit card company was a contractor for the bank. The contractor used another contractor that coaches credit card administrators to reverse charge backs by reversing the disputed charge month's later. A strongly worded letter to the CEO of the credit union resulted in a prompt refund and the change to discuss the concern I had with the credit card contractor not treating customers with the same professionalism as the credit union. Here is an example of a company very proud of it's chargeback reversal results. https://kount.com/chargeback-management

In Conclusion

Credit cards are powerful. When used responsibly with planning and discipline, they can make your financial life very convenient. In addition, responsible use of credit cards allows you to pay for goods and services without risking your checking account balance. You should locate and visit your local credit union. Relative to other financial institutions, credit unions may look out for your best interest.