Managing credit card problems

early amexAh credit cards, they have been around since 1950 when an astute American by the name of Frank McNamara established “The Diners Club” card. The card was the first to offer a sign now, pay later service. Members of the club would be able to sign for their dinner, and then pay the bill later. McNamara started the club with 27 participating restaurants and 200 $US3 memberships. These days there are few of us without some form of credit card and it’s important to be aware of the how to manage these pieces of plastic in both the good times and when things don’t go according to plan.

When you apply for a new card

When you’re thinking about getting a credit card, the dreams about shopping sprees often outweigh the reality of the fine print and the endless terms and conditions that credit cards come with.

However, when you apply for a credit card you must be given a ‘key facts sheet’.

This fact sheet contains information on:

  • The minimum repayments you must make when you receive your statement (or how it will be calculated)
  • The interest rate that applies to purchases and cash advances
  • The interest rate that applies to balance transfers (and for how long)
  • Promotional interest rate (if any)
  • Length of the interest-free period (if any)
  • Annual and late payment fees (if any)

If you don’t receive a key facts sheet, ask your credit card issuer.

Tips on managing your card

Check your minimum monthly repayment

Although the best thing to do is to pay off what you owe when you get your monthly statement, for some of us that can be a stretch. So if you can only afford to pay the minimum amount, your monthly credit card statement must tell you how long it will take to pay off your entire balance by making minimum monthly repayments. And remember that if you only make the minimum repayment each month, you will pay more interest and it will take longer to pay off your balance.

Just been offered more credit?

Credit card issuers are not allowed to send you invitations to increase your credit limit without first getting your agreement.
This applies to both new and existing credit cards.

Whether you decide to opt in or out of receiving invitations, you can ask your card issuer for an increase to your credit limit at any time.

If you do agree to receive invitations, you don’t need to accept a credit limit increase if you don’t want to or feel you can’t manage a higher amount of credit. You can also change your mind later and opt out of receiving invitations by contacting your card issuer at any time.

Check the fees for exceeding your credit limit

Since 1 July 2012, card issuers cannot charge you a fee on a new card when your card goes above your credit limit, without first getting your agreement. You can withdraw your consent to this at any time.  If you opt out of these over limit arrangements, the card issuer can still allow you to temporarily exceed your limit, but must not charge you a fee for doing so.

Dodgy fees and purchases on your statement

Just got your statement and found a fee from your credit card provider that is not correct or seems unfair? Or maybe you just noticed a purchase of an Andalusian pony appearing on your statement.
Never fear!
There is a simple process you can follow.

Call your credit card provider and explain the problem. They may also offer you a secure online feedback form which you can use to write up your grievance.
If you don’t like calling banks and listening to all that marvellous hold-on music, you can also write to them about your problem or concern.

How long will it take to resolve my dispute?

You need to notify your credit card provider of any disputed transactions immediately on receipt of your account statement. Many of the major banks claim that they must adhere to timeframes and rules set by Visa, MasterCard and American Express, which can take up to 120 days from the date the transaction was processed to your account. The Financial Ombudsman actually suggests that 45 days should be a fair enough amount of time to resolve your problem. This period is reduced to 21 days if your dispute concerns your difficulty making repayments on a credit card.

kids going shopping crazyYou should not be charged interest on a disputed transaction while it’s under investigation. However, many credit providers calculate “refunds” when the problem is sorted out. It’s at this point that they check to see exactly what refund entitlements are owed to you.

You need to continue to pay your account and your credit card account statement will have the minimum payment you are required to pay to meet your credit card obligations. The minimum payment needs to be made by the due date as normal. If you usually pay the closing balance on your credit card statement in full each month you need to continue to pay this to avoid interest. This balance would include the disputed amount.
Don’t forget that any chargeback will include the interest you paid on any disputed amount that was found in your favour.

What is a chargeback?

A ‘chargeback’ is where a customer’s bank reverses all, or part, of the amount of the disputed transaction back to a merchant’s bank.

What is the chargeback process?

  1. You raise a dispute by contacting your bank.
  2. They should then stop calculating interest on the disputed amount and contact the merchant’s bank.
  3. The merchant bank (the bank of the retailer you bought from) refers the dispute to the merchant and they either accept the claim or further investigate under scheme rules.
  4. If the merchant bank accepts the dispute, a credit is posted to the customer’s account.
  5. If the merchant bank does not accept the dispute, further investigation is completed and customer is advised.
  6. The process continues until resolution is complete and if you still feel hard done by, call the Financial Ombudsman (see below).

What are the most typical reasons for a chargeback?

  • Unauthorised transaction
  • Requested item not received
  • Duplicate processing
  • Invalid account number
  • Transaction exceed floor limit
  • Sales voucher not imprinted with card
  • Invalid transaction
  • Merchandise not received by purchaser
  • Credit voucher not processed

If you’re still not happy with your credit card provider

If you feel your credit card provider hasn’t resolved your dispute to your satisfaction, you should talk to the Financial Ombudsman Service.

Contact the Financial Ombudsman – now called the Australian Financial Complaints Authority (AFCA).

Or, call 1800 931 678 from 9am–5pm, Monday-Friday.

Before the AFCA can consider the dispute, your credit card provider must be given an opportunity to resolve the dispute with you directly.

In most cases, they have up to 45 days to respond to your complaint.

If your dispute concerns your difficulty meeting repayments on your credit card, they have up to 21 days to respond.

The FIO may be able to help if you believe your credit card provider has acted unfairly towards you, for instance by:

  • breaking a law
  • breaching a relevant Code of Practice
  • not meeting standards of good practice in the relevant industry sector.

They can’t deal with complaints about fees, unless certain circumstances apply.

For example, FOS can’t deal with a customer complaint that a fee charged was ‘too high’,

but can deal with complaints where the client claims:

  • the fee charged was not allowed by the contract between them and the FSP
  • the fee was not adequately disclosed
  • there was poor service (the dispute is about the poor service), and they are claiming a refund of the fee.

old credit cardGetting help if you are struggling with your debts

You may find it’s getting harder to survive from week to week. Your debts may be getting out of control – whether they’re credit card debts or not. If this is happening, you should swallow your pride and talk to people who will be very happy to listen to your concerns and help you through the difficult times. Don’t bother with paying a “debt solution” business to sort out your credit and finance problems, because the following services are free.

Here are some places you can go for free help and guidance:

Consumer Credit Legal Services offer free advice and resources for consumers in financial stress – they focus on the area of consumer credit – for example issues with credit cards, debts or repayments.

ACT – Consumer Law Centre

NSW – Financial Rights Legal Centre

QLD – Caxton Legal Centre

SA – Consumer Credit Law Centre

VIC – Consumer Action Law Centre

WA – Consumer Credit Legal Service

There are also financial counsellors who can help you if you are in financial difficulty.

Their services are also free, independent and confidential and they will help find solutions to your financial problems.

Financial counsellor information is available on the following website:

Financial Counselling Australia

Phone the free financial counselling hotline 1800 007 007 from 9:30am to 4pm, Monday to Friday

(Calls from mobile phones may incur a fee from the mobile phone carrier.)