Do you have a love-hate relationship with your credit cards? Apparently, we do as a nation.
Based on the amount of outstanding credit card debt topping one trillion dollars, Americans love to use credit cards. Based on the credit card complaints lodged with the Consumer Finance Protection Bureau (CFPB), there are also a significant number of Americans who hate certain aspects of using credit cards.
The CFPB has handled over 116,000 credit card complaints since it began accepting them in July 2011. Keep in mind that the CFPB is generally a last resort for resolution, so the overall complaint level is likely far higher.
These five issues top the overall CFPB list of individual complaints against credit card companies.
1. Billing disputes
The clear winner at 17 percent of credit card complaints, billing disputes include erroneous charges, unclear guidance on how to rectify billing problems, and reappearance of fraudulent charges that had been previously removed.
Consumers should check their accounts frequently; the sooner you detect a fraudulent charge, the easier it is to correct the situation. Most card issuers allow you to access recent account information on their websites. It’s also wise to review your terms and conditions so you understand exactly what you need to do in order to dispute a charge.
2. Identity theft/fraud/embezzlement
This category accounted for 10 percent of CFPB complaints and likely overlaps with billing dispute issues. Your best defense is to check your credit report regularly, says Rod Griffin, Director of Public Education for Experian. “Your credit report can help you identify potential frauds,” notes Griffin. “It also helps us ensure the information is accurate.” You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.
In today’s information-rich climate, you must take precautions to guard your personal information. Use strong passwords and encryption where possible, and avoid transferring personal information in public or over unsecured Internet connections. If you would like to prevent identity theft, check out our credit monitoring service.
What do you do if fraudhas already taken place? April Lewis-Parks, director of education and public relations for Consolidated Credit, suggests, “Contact the police … contact all three credit bureaus, let them know that your credit has been compromised. They will put a fraud alert on your reports and then if anybody goes to use your credit or get a new line of credit, you will be informed.” Lewis-Parks also suggests following up with the Federal Trade Commission (FTC) for further assistance. The CFPB is also available to help if other avenues fail to provide a resolution.
3. Closing/cancelling account
Approximately 7 percent of the CFPB complaints come from either an inability to close an account or having an account inadvertently closed. The issue is generally miscommunication between you and your card issuer. Call them directly to resolve the specific issue. If you are attempting to close an account, expect several offers to persuade you to change your mind. Decide what you will and will not accept before you call.
4. APR/interest rate
Consumers do not always understand how and when interest rates can change, especially with introductory offers or “teaser” rates. Misunderstandings can lead to large interest charges, and potentially a debt spiral that is difficult to reverse. Make sure that you fully understand the interest rate associated with your card, and check it regularly. Review your terms and conditions to find out your card’s policy on notification of interest rate changes. Of course, you can render this moot by paying off your credit card each month and never carrying over a balance.
5. Late fees
In some cases, misunderstanding of late fee policies are at fault — but this is the category where consumer complaints to the CFPB result in the greatest success. Over 56 percent of these complaints receive some form of monetary relief.
There are plenty of other reasons to complain about credit cards — the catch-all “other complaints” category was in second place in the CFPB report at over 12 percent of all complaints. Inability to cash in on rewards programs(or confusion in doing so) was a major contributor.
You can reduce the likelihood of complaints by protecting your personal information and fully understanding the policies and practices of your credit card holder, including the proper way to register complaints and redeem rewards. Ask questions before issues are raised, and you and your card issuer are more likely to reach a suitable resolution.
If you still aren’t satisfied, there are plenty of other card issuers who would be happy to have your business. Point that out to your current card issuer if you have to, and give them one last chance to resolve your concern. You may get a more satisfying result.