Last Updated Jun 27, 2011 11:25 AM EDT
But if you are going to use plastic for larger purchases, ongoing services or online purchases, then use credit cards. That's because under the Fair Credit Billing Act (FCBA), a federal law, only credit card holders have the right to dispute charges on their credit cards.
Unfortunately few consumers understand their responsibilities required to ensure the protections provided. While you can use the protections under the FCBA to help you avoid billing disputes, there are certain guidelines and time lines you need to follow.
Folks also should understand that under this law, none of the following procedures or protections applies to debit cards. Many consumers use their debit cards like credit cards these days. Debit cards even look like credit cards because they carry the MasterCard and Visa logos. Some debit cards offer similar protections, however, the most complete protections under federal laws are only offered to credit card users.
The following types of billing errors can be cleared up with a simple phone call instead of an official written dispute:
Clerical Errors: Mistakes such as an incorrect date or amount of a legitimate charge item can be easily changed over the phone.
Unfamiliar charges: Over half of all disputes arise from consumers not recognizing a charge. Usually, this is because the merchant's corporate name is displayed on the bill in place of the individual store name. People looking for a charge from a particular store will be confused by an unfamiliar corporate name. For example, the charge at the neighborhood car wash could show up under another name of the business owner on your card account statement.
Fraudulent charges: If a fraudulent charge does appear on your bill, companies are typically quick to address it because they want to maintain your faith in their card's security. Often they will research the transaction, and send you an affidavit stating that you sign and return stating that you did not authorize the charge.
All other billing problems or errors require you to send a written letter to your credit card company, stating that you are disputing the charges. Such errors might include:
- Charges from an Internet service provider that you used in the past but have since cancelled their service,
- "Cramming" or charges tacked on by the creditor such as insurance or other services they sell and you don't want,
- A merchants failure to post a correct credit for returned items, or
- Charges for services or goods that you ordered and never received.
Check back in a few days when I'll write about the process for submitting a billing dispute.