10 Things You Might Not Know About Your Credit Card

As you might imagine, we get a lot of questions about using credit cards. Based on those piles of emails we've put together a list of 10 things a lot of people don't know about credit cards. Enjoy!

1) Unsigned Cards Are Not Valid And Merchants Can And Will Refuse Them
You might think that everyone knows that you have to sign your credit card in order for it to be valid — after all — there's a panel on the back that says "Not Valid Unless Signed," but you'd be shocked at the number of angry emails we get from people who have tried to use an unsigned credit card with "SEE ID" or "CHECK ID" written on it and were turned away when they refused to sign their card.

Here's what VISA says should happen when you present an unsigned card:

1) The merchant will ask for your government ID.
2) You will be asked to sign the card. If you sign it, the signature on the card will be compared to the signature on the government ID. If you refuse, the card will not be accepted.

Here's VISA's official statement on "See ID":

Some customers write “See ID” or “Ask for ID” in the signature panel, thinking that this is a deterrent against fraud or forgery; that is, if their signature is not on the card, a fraudster will not be able to forge it. In reality, criminals don’t take the time to practice signatures: they use cards as quickly as possible after a theft and prior to the accounts being blocked. They are actually counting on you not to look at the back of the card and compare signatures—they may even have access to counterfeit identification with a signature in their own handwriting. “See ID” or “Ask for ID” is not a valid substitute for a signature. The customer must sign the card in your presence, as stated above.

Most merchants don't follow this policy, but some (most notoriously— the U.S. Postal Service), are quite strict.

2) The Maximum Liability For Unauthorized Use Of A Credit Card* Is $50 According To Federal Law
The Fair Credit Billing Act protects you from suffering damages due to unauthorized use of your credit card. If you report a lost or stolen card before anyone uses it, you are not responsible for any charges. If you do not report it before an unauthorized use you are liable for a maximum of $50.

(*Credit cards only. Debit cards and ATM cards are covered under the Electronic Fund Transfer Act, and your liability depends on how quickly you report the loss. Unlike credit cards, debit and ATM cards can have unlimited liability in certain circumstances.)

3) Merchants Cannot Require You To Present ID, Unless Your Card Is Unsigned
Some consumers enjoy it when a clerk asks to see their ID. Others do not. In some states, it's actually illegal for a store to record any additional information (such as an address or drivers license number) as a condition of processing a credit card transaction (unless the address is needed for shipping, of course.) For some reason this is always a hotly debated topic, so we'll go right to VISA for the answer:

Although Visa rules do not preclude merchants from asking for cardholder ID, merchants cannot make an ID a condition of acceptance. Therefore, merchants cannot refuse to complete a purchase transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures. Laws in several states also make it illegal for merchants to write a cardholder’s personal information, such as an address or phone number, on a sales receipt.

We think that's pretty clear. Don't want to show your ID? Don't.

4) Merchants Cannot Require A Minimum Transaction Amount
It's a violation of the credit card company's merchant agreement to refuse a transaction because it is below the "minumum."

VISA says:

Imposing minimum or maximum purchase amounts in order to accept a Visa card transaction is a violation of the Visa rules.

Mastercard says:

A Merchant must not require, or indicate that it requires, a minimum or maximum Transaction amount to accept a valid and properly presented Card

5) Merchants Cannot Charge A Surcharge For Using A Credit Card, However, They Can Offer A "Cash Discount"
You may have noticed that gas stations are starting to offer a different, higher price for credit cards. This isn't technically allowed— unless it is marketed as a "cash discount." In other words, if you fill up your car and find that you've been charged more than advertised because you paid with a credit card — that's not allowed. If, however, you decide to pay with cash because you saw an advertised "cash discount" to the "regular price" — that's ok. A subtle distinction, but an important one.

(There is something called a "convenience fee" that some institutions are allowed to charge if they do not typically accept credit cards in their normal course of business. The example VISA gives is a utility company where the customary way is to pay by mail or in person. The rules for charging this fee are somewhat complicated and there are loopholes, etc.)

6) Many Credit Cards Have Programs That Will Automatically Double The Manufacturer's Warranty And Other Excellent Benefits
We get a lot of complaints that can be easily solved by the complainee's credit card company. We've helped readers get laptops replaced out of warranty, and helped them get their money back when Best Buy sold them a box full of bathroom tile instead of a hard drive. Your card may come with extended warranty protection, 90 day accidental damage protection that includes vandalism, rental car insurance, road side assistance, baggage insurance, and return protection. You should be aware of what benefits your credit or debit card offers so that you remember to use them when you need them.

7) Merchants Are Not Allowed To Make You Give Up Your Right To A Chargeback
You might see a receipt that has suspicious-looking waiver stating that you're agreeing to give up your right to issue a chargeback against the merchant for any reason, no matter what, period. These waivers are the result of some crafty entrepreneurs selling sales-receipt paper with the waiver printed on it, claiming that it helps protect the merchant. It's all nonsense and it isn't allowed. If you see it, you should report the merchant.

8) Merchants Are Not Allowed To Place A Hold For The Estimated Tip
Because so many consumers have instant access to their account information, merchants aren't allowed to place an "authorization" for an estimated tip. For example, if you go to dinner and the bill is $100 and you pay with a credit card, the restaurant might be tempted to "authorize" your card for $120—a 20% tip. If you choose to leave a 15% tip and then check your balance — it will appear that you have been overcharged. This apparently results in lots of angry customers, so the practice has been forbidden in VISA's merchant agreement.

9) If Merchants Suspect You Of Fraud They Are Supposed To Call With A "Code 10"
If a merchant is suspicious of you, they are supposed to make a "Code 10" call. They are instructed to take your card, call in, and say “I have a Code 10 authorization request." They will then be asked a series of questions that can be discreetly answered with either yes or no. The merchant bank will then authorize or deny the card. They are not supposed to threaten to call the police or try to detain you. Mastercard says that if the police need to be involved, the "Code 10" operator will call the police while the clerk waits on hold.

10) If Merchants Break These Rules, You Can Report Them To The Credit Card Company
Here's Mastercard's Merchant Violation form. To report merchant violations to VISA, they ask that you report them to the financial institution that issued you your Visa card. You should be able to find the number your on Visa statement or on the back of your card.

(Photo: Maulleigh )

Original here