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Frequently Asked Questions (FAQS);faqs.213 Archive-name: consumer-credit-faq/diff4 Last-modified: 21 Aug 1992 Please see part 1 for explanations. 12c12 < Last-modified: 21 Aug 1992 --- > Last-modified: 21 Oct 1992 98a99,101 > > Latest reports have TRW dropping this rating, but I have not been able > to confirm this with my previous source. -- The opinions expressed above are those of the author and not SPSS, Inc. ------------------- adams@spss.com Phone: (312) 329-3522 Steve Adams "Space-age cybernomad" Fax: (312) 329-3558 Xref: bloom-picayune.mit.edu misc.consumers:61097 news.answers:4272 Path: bloom-picayune.mit.edu!enterpoop.mit.edu!spool.mu.edu!olivea!pagesat!spssig.spss.com!adams From: adams@spss.com (Steve Adams) Newsgroups: misc.consumers,news.answers Subject: misc.consumers FAQ on credit part 1 of 4 Message-ID: <1992Nov30.140238.631@spss.com> Date: 30 Nov 92 14:02:38 GMT Expires: Thu, 14 Jan 1993 14:02:39 GMT References: none Sender: news@spss.com (Net News Admin) Followup-To: misc.consumers Distribution: usa Organization: SPSS Inc. Lines: 284 Approved: news-answers-request@MIT.Edu Supersedes: <1992Oct23.174657.8307@spss.com> Archive-name: consumer-credit-faq/part1 Last-modified: 21 Oct 1992 Welcome! Many questions are frequently asked on misc.consumers. This FAQ tries to answer questions about one area, namely consumer credit. (Even within that area, there's so much information that the FAQ is specialized in credit cards and credit reports.) I hope others will put together similar lists in other areas. Such lists can be forwarded to me for posting and maintenance. This FAQ (Frequently Asked Questions) list should be a repository of the canonical "best" answers. If you know a better answer or a change that improves an answer, please tell me! (Use email, please. Traffic in this group is high, and I might easily miss a relevant posted article.) Steve Adams, SPSS, Inc., Chicago, IL, USA adams@spss.com Because this FAQ list is quite long, it is divided into four parts. Part 1 (this file) is a table of contents, so that you can see easily whether your question is answered in the other two parts. (If you have last month's version, you may want to look at the diffs rather than reread these four long articles. Look for "misc.consumers FAQ on credit diff" in the Subject lines.) Contents of part 2 (credit cards) ================================= section 1. Credit cards, other cards 101. What kinds of cards are there? 102. What is an affinity card? 103. Is MasterCard better than Visa, or vice versa? What about American Express, Diners Club, etc.? 104. Why does my neighbor's MasterCard or Visa have different rates and fees from mine? 105. What is a secured card? 106. What is a guaranteed card? 107. What is an unsecured card? 108. What is a debit card? 109. How does an ATM card differ from a debit card? 110. Where can I find information about telephone credit cards? section 2. Good deals, bad deals 201. In general, what should I look for in a credit card? 202. Do I want a fixed-rate or floating-rate (variable-rate) card? 203. How do annual fees work? 204. Can I get the annual fee waived at renewal time? 205. What about application fees? 206. What other fees should I be concerned about? 207. Why is a grace period important? 208. Why is a discount better than a rebate? 209. What else should I watch out for in cards with rebates? 210. How do I evaluate a secured card? 211. Shouldn't I get as many cards as I can? 212. Why would I want more than one of the same kind of card? 213. Is a gold card worth the higher annual fee? 214. I was mailed a solicitation for a Visa or MasterCard that accrues frequent-flyer miles on my purchases. Is this a good thing? 215. I belong to the Benevolent Order of Mumble, and they mailed me a credit-card solicitation. It would be a MasterCard with their logo on it. Is this a good deal? 216. My bank offered me a deal if I would agree to set up my checking account for automatic withdrawal on the due date to pay the credit card. Is this a good idea? 217. I got a call (or saw an ad) inviting me to call a 900 number for a "guaranteed" MasterCard or Visa. Is this a good deal? 218. What should I watch out for in a corporate card? 219. I saw an ad for a card I've never heard of. What's the story? 220. I got an application for a card that didn't state interest rate and fees. Is this legal? section 3. Lists of good cards 301. Where are lists of the best cards? 302. I don't want to look up magazines. Isn't there an easier way? 303. I understand why low rates or no annual fees are important. Why would I care about which banks issue the most cards? 304. Okay, I know that First Mumble Bank of Fubar has a card I want to apply for. How do I get in touch? Contents of part 3 (credit cards continued) =========================================== section 4. When you buy with a credit card 401. Is it better to pay by check or by credit card, as a rule? 402. When I make a purchase, can they ask for my address or phone number? 403. If it's against the rules, why do merchants insist on address or phone number? 404. What should I do when asked for personal information I don't want to give? 405. I tried to charge a $10 item but the merchant pointed to a sign "minimum charge $20." Is this valid? 406. Can the merchant charge credit-card users more than cash customers for the same item? 407. I made a hotel reservation, and guaranteed it with my credit card. When I showed up, the hotel denied my reservation. Have I any recourse? 408. I paid by check, and the merchant wrote my credit-card number on the back. If the check bounces, can the merchant charge my card? 409. Can mail-order merchants charge my card before they ship? 410. Is there any official document that I can take with me to show merchants who violate the rules? 411. Where should I report merchants who break the rules? 412. Does my payment have to reach the lender by the "due date" on the bill, or is it enough if I just mail it by the due date? 413. I have a checking or savings account at the same bank as my Visa or MasterCard. Can the bank freeze my account or take money from it if I miss a payment on my credit card bill? section 5. Billing errors and overcharges 501. What kind of problems am I protected against? 502. There's an error on my bill. What should I do? 503. I got ripped off by the merchant. What should I do? 504. Exactly which purchases qualify under the Fair Credit Billing Act? 505. Will the bank get involved right away? 506. What does resolving a problem "in good faith" mean? 507. Any other hints for dealing with a problem merchant? 508. I tried in good faith, but the merchant won't budge. Can the bank help? 509. What does the bank do when I ask for a chargeback? 510. What happens to finance charges on the disputed amount? 511. What if I paid my bill in full before I noticed a problem? 512. How do I avoid problems with unauthorized charges? section 6. Miscellaneous credit-card stuff/Fair Debt Collection Act 601. What do the digits in my credit-card number mean? 602. I lost my credit card, or it was stolen. What should I do? 603. What is the 800 number for customer service? 604. Why was I turned down for a credit card? 605. Should I give my credit-card number over the phone? 606. What may creditors do? Fair Debt Collection Act. Contents of part 4 (credit reports) =================================== section 7. Credit reports--in general 701. What is "the credit bureau"? 702. Who assigns my credit rating? 703. How long does it take for an event (positive or negative) to show up on my credit report? 704. How does a lender decide whether to grant a loan? 705. Should I apply for as many credit cards and charge accounts as possible, even if I won't use most of them right away? 706. I was refused a loan or credit card. What can I do? 707. One lender refused my loan, but another one said it was fine. How can this be? 708. I'm planning to apply for a loan, and I'd like to know up front that my credit is clean. Can I get a copy? 709. How long do negative items stay in my report? section 8. Getting and reading your credit report 801. How much does my credit report cost? 802. Can I get a free copy of my own credit report? 803. Can I phone in my request? 804. Where do I mail my request for a credit report? 805. What information should I provide when requesting a report? 806. Help! What are all those codes on my credit report? 807. What are "inquiries" on my credit report? section 9. Fixing your credit report 901. I've got a copy of my credit report, and it's wrong. What now? 902. What exactly will the credit bureau do with my correction? 903. My credit report shows adverse information, but I have a letter from the bank saying that information is false. Can I submit this letter to the credit bureau? 904. The credit bureau ignored my correction -- or it says an item is right but I can prove it's wrong. What can I do? 905. My credit report shows transactions from other people with the same name or similar names. How can I get it cleaned up? 906. My spouse and I had joint credit accounts, and s/he ran up a lot of debts. Now we're divorced, and I want my ex's debts off my report. 907. I got in trouble and ran up a lot of debts I couldn't pay, and now my credit report looks awful. How can I get credit? 908. Are "credit repair" agencies legitimate? Disclaimers =========== The information presented here comes from others' research and from seemingly well-informed articles in news media and on Usenet. What is here is true to the best of my understanding, but I am only human (and I'm not an attorney). Before you rely on any of the information here, check it out for yourself. This is only a guide. This list relates to law and custom in the U.S. and should not be taken as a guide to consumer credit in other nations. Also, it concentrates on Federal law as opposed to state laws, which vary widely. State law may give you important protections in addition to those from Federal law, but in every state you have _at_least_ the protections derived from Federal law and listed here. I'm always interested in state and local comparisons, but by design I omit almost all state information from this list: it's long enough already! Other resources =============== The Federal Reserve System publishes a series of pamphlets that describe your legal rights and advise you on conducting your financial affairs. Most are free or cost well under $1. You can get a free index of them from your nearest Federal Reserve Bank; ask for the catalog {Public Information Materials}. (If you don't know where the nearest Federal Reserve Bank is, any bank can tell you.) Readers of this FAQ list will be especially interested in the publications listed on six pages under "Consumer Finance," most intended for the general public. There are also many publications on home-equity loans and other home mortgages. The Federal Financial Institutions Examination Council puts out a booklet called {Consumer Rights}. It lists the Federal laws that protect consumers' rights and explains how to make complaints against financial institutions. I picked up a copy in the literature rack at the FRB of Cleveland; you might try writing the Council at 1776 G Street NW, suite 850B, Washington DC 20006 or ask at your library. General net usage ================= Many FAQs on most newsgroups are really about how to use the net, your newsreader, or email, or what is proper netiquette. If you don't know about that stuff, you are strongly urged to subscribe to either news.newusers.questions or news.announce.newusers, or both. You may also be interested in news.answers, which collects FAQ lists for many newsgroups. That newsgroup should have a long expiry time at your site; if not, talk to your sysadmin. FAQ lists are also available by anonymous FTP or email from pit-manager.mit.edu; see details below. Acknowledgements ================ I want to thank the many misc.consumers readers who've sent corrections and suggestions since the first edition of this list in summer of 1991. I regret that I cannot thank most of them by name, because I failed to keep track of correspondents' names and addresses for the first six or seven months. The following have contributed after 25 Dec 1991: Muhammad Basit, Bill Branum, Craig Browning, Jim Burke, Dale Finn, David Grabiner, Joe Konstan, Tim Lee, John Levine, Roger Lustig, Will Martin, Dave Niebuhr, Rich Salz, Robert Sawyer, Mark Schuldenfrei, Russell Schulz, Carol Springs, William December Starr, Ivan Weisz, David Whiteman, Tom Wicklund, Hongfei Zhang Special thanks goes to Stan Brown, who originated this FAQ. ------------------------------ For updated copies of the complete misc.consumers FAQ on credit, please look first in news.answers for articles with subject lines like this article's. New versions are posted around the third week of each month, in such a way that they should not expire until the following month's version is posted. If you can't find the current edition in news.answers, use ftp to pit-manager.mit.edu [18.172.1.27] to retrieve these files: /pub/usenet/news.answers/consumer-credit-faq/part1 /pub/usenet/news.answers/consumer-credit-faq/part2 /pub/usenet/news.answers/consumer-credit-faq/part3 If you can't find the FAQs in news.answers and you have no ftp access, send a message with the following text send usenet/news.answers/consumer-credit-faq/part1 send usenet/news.answers/consumer-credit-faq/part2 send usenet/news.answers/consumer-credit-faq/part3 and no subject to mail-server@pit-manager.mit.edu. Add "help" on a separate line for instructions on using the server. (continued in part 2) -- The opinions expressed above are those of the author and not SPSS, Inc. ------------------- adams@spss.com Phone: (312) 329-3522 Steve Adams "Space-age cybernomad" Fax: (312) 329-3558 Xref: bloom-picayune.mit.edu misc.consumers:61098 news.answers:4273 Path: bloom-picayune.mit.edu!enterpoop.mit.edu!spool.mu.edu!olivea!pagesat!spssig.spss.com!adams From: adams@spss.com (Steve Adams) Newsgroups: misc.consumers,news.answers Subject: misc.consumers FAQ on credit part 2 of 4 Keywords: credit-cards chargebacks consumer-rights Message-ID: <1992Nov30.140358.699@spss.com> Date: 30 Nov 92 14:03:58 GMT Expires: Thu, 14 Jan 1993 14:03:58 GMT References: <1992Nov30.140238.631@spss.com> Sender: news@spss.com (Net News Admin) Followup-To: misc.consumers Distribution: usa Organization: SPSS Inc. Lines: 630 Approved: news-answers-request@MIT.Edu Supersedes: <1992Oct23.174747.8378@spss.com> Archive-name: consumer-credit-faq/part2 Last-modified: 21 Oct 1992 This FAQ (Frequently Asked Questions) list should be a repository of the canonical "best" answers. If you know a better answer or a change that improves an answer, please tell me! (Use email, please. Traffic in this group is high, and I might miss a relevant posted article.) Steve Adams, SPSS, Inc., Chicago, IL, USA adams@spss.com Because this list is quite long, I am posting it in four parts: part 1 of 4: detailed contents and introduction part 2 of 4: credit cards (this file) part 3 of 4: credit cards continued part 4 of 4: credit reports Please read the disclaimers, acknowledgements, and general information in part 1. (The most important disclaimer is that I am not a lawyer and this file is not to be construed as legal advice.) Some helpful free pamphlets are available from the FRB. You can write to Board of Governors of the Federal Reserve System, Publications Services, MS-138, Washington DC 20551 for these among others: - How to File a Consumer Credit Complaint - Consumer Handbook to Credit Protection Laws The phone number is (202) 452-3244 in case they accept phone orders. See part 1 of this FAQ list to obtain a catalog of FRB publications, including many on home-equity loans and other home mortgages. section 1. Credit cards, other cards ==================================== EDITOR's NOTE: I rarely use credit cards, but did use them quite a bit in the past. This information is compiled from numerous sources, and is as accurate as such information can be. This section tells you about the types of credit cards, and some non-credit cards. Q101. What kinds of cards are there? - "bank cards," issued by banks: Visa, MasterCard, and Discover; - "travel and entertainment (T&E) cards" like American Express and Diners Club; - "house cards" that are good only at the stores of one chain. Sears is the biggest one of these, followed by the oil companies and phone companies and on down to your local department store. T&E cards and national house cards like Sears have the same terms and conditions wherever you apply. Bank cards are issued by the bank you apply to, which is why terms and fees vary widely among banks. However, MasterCard International and Visa U.S.A. Inc. do establish minimum standards and rules. Bank cards have some subspecies, described below. Q102. What is an affinity card? An affinity card carries the logo of an organization in addition to the emblem of the card. It is typically a Visa or MasterCard. Sometimes card users get frequent-flyer miles or points toward merchandise from a catalog. The organization solicits all its members to get cards (or even turns over its mailing list). In return it gets some fraction of the annual fee or of the finance charge, or some amount per transaction, or a combination of incentives. Seldom does the organization get much money out of it: most of the profits go to the card issuer. See section 2, "Good deals, bad deals," for how to evaluate these offers. Q103. Is MasterCard better than Visa, or vice versa? What about American Express, Diners Club, etc.? In the U.S., almost any establishment that takes MasterCard takes Visa, and vice versa. In Europe, many establishments take just one or the other. If you're going to be doing all your spending in the U.S., you may not want or need both cards. American Express, Diners Club, and their kin were originally aimed at the more upscale "travel and entertainment" market. They are accepted at many places, though not as many as Visa and MC. Some places don't take MC and Visa but do take American Express or DC. I don't have an AmEx card, but someone who does posted a list of the benefits he had actually used in a year and concluded that the card was worth more money to him than the annual fee. He cited student and non-student discounts for air travel, extra frequent-flyer miles for a variety of airlines, and "twofers" at some big-city restaurants. Your benefit will be different if your charging patterns are different. The best card for you is the one that is accepted where you shop and charges you the least amount of money for the services you actually use. (For example, if you always pay off your balance each month, you want to make sure you get a card with a grace period but the interest rate doesn't matter much.) Q104. Why does my neighbor's MasterCard or Visa have different rates and fees from mine? MasterCard and Visa rates are set independently by the banks that issue them. In fact, a given bank may offer several different rate and fee schedules. Sometimes you can pick which one you want; other times the bank will offer you a single set of terms with no option, even though it offers another customer a different set of terms. That's why it's worth shopping around rather than just applying for "a MasterCard" or "a Visa." See section 2, "Good deals, bad deals." This is not true of the T&E cards. One American Express green card is like all other American Express green cards in the country. (Corporate AmEx cards may vary from individual ones.) Q105. What is a secured card? Secured cards require you to make a bank deposit up front. The limit on the card is usually related to the amount of the bank deposit. The bank has the right to take money from your deposit if you don't pay your bill. Secured cards are usually sold to people who have credit problems and can't get a regular "unsecured" card. But a secured card from a bank may be a good deal for anyone; see section 2, "Good deals, bad deals." A secured MasterCard or Visa looks just like a regular one, and the law ensures that it has all the same consumer protections built in. Q106. What is a guaranteed card? It's another name for a secured card, typically offered through 900 numbers. Though technically legal, these are not a good deal for the consumer when they carry an application fee or a 900-number charge; see section 2, "Good deals, bad deals." Q107. What is an unsecured card? You may not often hear this term. Technically, a "regular" card is unsecured. This means that the bank can't take specific assets of yours if you don't pay the loan, but rather they have to sue you or force you into bankruptcy. Q108. What is a debit card? As its name implies, it is not a credit card. Instead of running up a bill for you at the end of the month, the debit card runs down your account at the moment the sale is made. Merchants like these because they get instant payment without worrying about bad checks. Debit cards are convenient. But it's a lot more painful to resolve a problem if the money is gone from your account (as with a debit card) than if it's just numbers on a piece of paper (as with a credit card). And if you lose a debit card, your whole account can be cleaned out with no recourse for you. You decide whether you want to take on that risk. A reader has reported that his Schwab account has a debit-type card associated with it, but it is treated like a credit card for other purposes. In other words, it is a credit card, but the debit is made immediately to his Schwab account. Consumers in the know don't like debit cards because they give you less protection in case of disputes than credit cards do. (See section 5, "Billing errors and overcharges.") Q109. How does an ATM card differ from a debit card? An ATM (automatic teller machine) card is a form of debit card, but you use it in a cash machine by punching in your code number. (In common speech, "debit card" means the kind that looks like a credit card, where you sign for purchases.) The ATM card is a little less dangerous if you lose it, since nobody can use it to drain your account without your PIN (personal identi- fication number). Also, most banks limit the amount of cash that can be withdrawn every day on an ATM card. On the other hand a Visa or MC debit card lets where a thief clean out your whole account with one purchase. By the way, some banks are now issuing combined ATM-debit cards. Depending on your viewpoint, this gives you the advantages or the disadvantages of both. Q110. Where can I find information about telephone credit cards? Subscribe to the newsgroup comp.dcom.telecom and watch for the periodic posting on how to use the Telecom archives. Please don't post requests for credit-card information there. You should also be aware of hybrid cards like the AT&T Universal card (both MasterCard and Visa) and the Ameritech Complete MasterCard, which act like regular bank cards but also let you charge phone calls. section 2. Good deals, bad deals ================================ This section guides you to the questions you should ask yourself in evaluating any credit card before you apply. Q201. In general, what should I look for in a credit card? There are three principal features to the card itself: interest rate, annual fee, and grace period. By law, all must be disclosed at the time you apply. (They are discussed in the following Qs.) Some cards, such as Discover and the new Ameritech Complete Master- Card, pay rebates as well. Some cards offer other features like frequent-flyer miles and extended warranties on purchases. You have to decide how much those are worth to you. Also important is the pattern of your shopping: a card that your favorite merchants don't honor isn't much good to you. Q202. Do I want a fixed-rate or floating-rate (variable-rate) card? The interest rate is the rate charged on purchases and cash advances (generally two different rates). It can be fixed or floating. Fixed rates are not truly fixed, because the banks will change them every year or so. Floating rates are typically a bit lower than fixed rates, but fluctuate every month according to the latest T-bill sale, or the phase of the moon, or whatever. If you buy something you're expecting to pay off over many months, this makes it hard to guess how much finance charge you'll be paying. Floating rate and variable rate mean the same thing. Years ago, credit-card issuers would quote an interest rate that was not directly comparable with other lenders' rates because the method of computation was not standard. Now the law requires lenders to quote an Annual Percentage Rate (APR) so that you can compare cards. Interest rates are all over the map. In a recent {Wall Street Journal} list, a secured card was as low as 8.0% and an unsecured card as low as 10.5%; you may also see interest rates as high as 21.9%. Q203. How do annual fees work? The annual fee is, well, a fee that the card issuer bills to your account annually. Every year, on the anniversary of the date your account was opened, the fee for the coming year is billed to your account. Typical charges are $18-$20 for regular bank cards (about $40 for gold bank cards) and anywhere from $35 on up for various flavors of T&E cards. House cards are typically free. Many lenders waive the fee the first year to get you to sign up, then depend on you to forget a year later that you'll be charged an annual renewal fee. There's nothing shady about this as long as it's disclosed up front. The AT&T Universal Card no-annual-fee offer has expired. If you don't have an AT&T Universal Card now, you can apply for one but you may have to pay an annual fee. However, AT&T is still inviting some people to apply for a no-fee card. Q204. Can I get the annual fee waived at renewal time? Many lenders have "secret" programs in effect where if you ask them they will waive the annual fee. (AT&T confirmed on 19 March 1992 that it is waiving the fee on its Universal cards for at least some customers who ask.) Some do it only if you charge a certain amount per year; others have other criteria. It certainly can't hurt to call just before renewal time and ask. (If you wait until after the fee is already on your statement, your chances aren't as good.)