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At-A-Glance Card 'Rulebook'

When you know the rules, you hold all the cards

Knowing the rules is important when using plastic—credit, debit, prepaid and gift cards. Choosing the wrong card, merchant or transaction type could cost you money or cause you to forgo important cardholder protections.

This website is your payment card rulebook. You’ll find everything you need to know about using credit, debit, prepaid and gift cards safely and wisely. The more you know, the more likely you are to make the right moves.

Credit Card Surcharging

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The Rule
In coming months, merchants may be able to impose a surcharge, also called a “checkout fee,” on credit card transactions in most states. That means you could pay as much as 4% more for those purchases you make with a credit card. Your Move

Your Move
Know what the retailer’s policies are regarding surcharges for credit card use and shop accordingly. Merchants are not required to impose a fee so you might find businesses that will accept payment by credit card without tacking anything onto your bottom line. If you encounter credit card surcharges in CA, CO, CT, FL, KS, ME, MA, NY, OK or TX, where they are prohibited under state law, you can report them to the state attorney general. Learn More »


Debit Card Routing

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The Rule
Merchants can now choose which network to route, or process, your debit card transaction on, even if it’s different from the network brand (Visa, MasterCard, Discover or American Express) on the front of the card. This raises the possibility that your card could be processed on a network that doesn’t offer the same level of security and benefits. Your Move

Your Move
Since the change only affects debit cards, you could use a credit card and be confident that the network being used to route your payment is the same as the logo that appears on the front of your card. If you do use your debit card, choose ‘credit’ rather than ‘debit’—signing a receipt (credit) to authorize a debit from your checking account rather than entering your PIN (debit) may preserve the ‘zero liability’ protection the network provides. Learn More »


Payment Steering

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The Rule
Merchants can offer incentives—typically discounts—for customers to pay using the merchant’s preferred form of payment, which could include a debit card rather than a credit card, PIN debit rather than signature debit, or cash. That means you could be denied a discount or other benefit for choosing one form of payment over another. Your Move

Your Move
Know which retailers offer incentives for which payment methods and make your shopping and payment decisions accordingly. Be aware that some incentives come in the form of a discount on a future purchase—not a same-day discount. To take advantage of this type of "future" incentive, you would have to return to the store with your coupon or receipt and make another purchase. Learn More »


Credit Card Minimum Purchase Requirements

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The Rule
Merchants are allowed to require customers who pay by credit card to purchase a minimum amount—up to $10. That means you could be denied the opportunity to make a purchase using your credit card if your total does not equal or exceed the required minimum. If you don’t have cash, you may find yourself having to buy more than you want or need. Your Move

Your Move
Familiarize yourself with your favorite merchants' policies. Merchants are not required to impose minimum purchase requirements, so many will still will accept your credit card for smaller purchases. As alternatives, use a debit card—minimum purchase requirements don’t apply to them—or cash for small purchases. Learn More »


Interchange Fees

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The Rule
The law limits the fees that merchants pay banks when their customers use debit cards. The impact of this change is still being assessed: customers of large retailers could benefit from slightly lower prices while the customers of smaller merchants might see prices rise a little. Banks lost revenues under the new law, which has prompted higher bank account fees and reduced benefits for banking customers. Your Move

Your Move
If your bank increases its checking account or debit card fees, find out if there is a way to avoid them entirely—maintaining a minimum account balance, for example—or shop around for a better deal. Be aware of which retailers offer a discount for non-debit forms of payment and make your shopping decisions accordingly. Learn More »


Credit Card Minimum Age Requirements

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The Rule
Credit card applicants now must be at least 21 years old or provide proof of adequate income—otherwise, there has to be a co-signer on the account. That means if you’re between 18 and 21 and can’t provide proof of income or a co-signer, you’ll have to do without a credit card for a while. Your Move

Your Move
If you can’t qualify for a credit card, consider a prepaid card, which can be used in many of the same ways as a credit card but does not have the same eligibility requirements and does not allow you to get into debt. Prepaid cards allow you to load (and sometimes reload) designated dollar amounts onto the card. Each time the card is used, the amount of the purchase is deducted from card's balance. Learn More »


Interest Rate Increase

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The Rule
Credit card issuers generally are prohibited from increasing the interest rate (APR) on your credit card in the first year unless you have an intro rate that expires, your monthly payment is more than 60 days late or your interest rate is tied to an index that goes up. After the first year, rate increases outside these categories require at least 45 days’ notice and can only apply to new transactions. Your Move

Your Move
If you have a temporary ‘teaser’ rate, know when the rate is due to rise so you’re not caught off guard. If you are hit with a rate increase on new purchases that you disagree with, stop using the card and pay off the balance. Learn More »


Credit Card Fees

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The Rule
Late fees are limited to $25 unless you pay late twice in six months. Over-the-limit fees are allowed only if you ‘opt in.’ And upfront account-opening fees—found on cards that target consumers with poor credit—can't exceed 25% of the available credit limit in the first year of the card. Your Move

Your Move
Make your payments on time. Don't opt in to over-the-limit fees—if you do exceed your limit, the credit card issuer can impose one over-the-limit fee per billing cycle of up to $25. If you don’t opt in, transactions that you attempt to make but which exceed your credit limit most likely will be declined and you won’t be charged a fee. Beware of cards that get around the restriction on upfront fees by charging high fees before the card is, technically, opened. Learn More »


Card Payments

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The Rule
Your credit card due date must be the same each month, and the date must be at least 21 days after the statement is mailed or delivered. Payments can't be considered late before 5 p.m. on the due date, and payments due on weekends, holidays or days the card issuer is closed can’t be considered late, either. If you pay more than the minimum amount due, the issuer must apply the excess to your highest-interest balances. Your Move

Your Move
Sign up for payment alerts at the cardholder website or set up your own system that ensures you make your payments on time. If you carry a balance, try to pay more than the minimum every month, and pay off the entire balance as quickly as possible. Avoid credit card cash advances, as they may have a higher interest rate than purchases. Learn More »


Gift Cards

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The Rule
Gift cards—store gift cards and those with a Visa, MasterCard, American Express or Discover logo—must remain valid for at least five years, and dormancy (inactivity) fees can be assessed on cards that have not been used for 12 months or more. Your Move

Your Move
Use your gift cards as soon as possible to avoid lost value or fees. Even if the date on the front of the card indicates it’s expired, request a replacement card at no charge if money was placed on the card in the past five years. Be aware that even though you can incur only one inactivity fee per month, there’s no limit on the fee amount, so use the card at least once per year. Learn More »


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At-A-Glance Card 'Rulebook'


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Paying with Plastic: An introduction to payment cards

(PDF) NEW! This 2-page fact sheet explains the differences between credit, charge, debit, prepaid and gift cards. It can help you choose the best option for every transaction.
Source: Consumer Action

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Tips


Light bulbYou are entitled to a free copy of your credit report each year from the top three credit reporting agencies. Go to annualcreditreport.com.


Light bulbOnline calculators and mobile apps that banks and other websites provide are another great way to help figure out how long it will take for you to pay off your balances under various payment scenarios.


Light bulbIt's easy to save by setting up automatic transfers from your paycheck or checking account into your savings account.


Light bulbif you're paying monthly checking account fees, check to see if you can avoid them by setting up direct deposit to your checking account.


Light bulbSet a cap on your credit card spending and trigger an alert when you near the limit.


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