5 scariest things on your credit card statement
Take the fear out of opening your card statement
If you're looking for a fright fest this month, take a moment to examine your credit card statements. Although some of these five items may scare you, fear not. You can turn a potential credit horror story into one with a feel-good ending with these survival tips:
1. The interest vampire: That little box that discloses how long it will take to pay off your debt if you make only minimum payments.
Otherwise known as the Credit CARD Act minimum payment and interest disclosure box, you'd be surprised how many people think the figures in that box are mathematical errors, says John Ulzheimer, president of consumer education at SmartCredit.com. "'How could it possibly take me 17 years to pay off my debt?'" you might wonder. The information actually converts complicated credit card attributes such as interest rates and minimum payments into easy-to-understand information. "What most people learn from this box is that it will take many of them more time to pay off their credit card than it will take to pay off their mortgage," says Ulzheimer. Now, that's scary!
What to do: To become motivated to pay off your debt more quickly, you should come up with a game plan and put it on paper, says Ornella Grosz, speaker and author of "Moneylicious: A Financial Clue for Generation Y." "One option is to list your debt in ascending order; that way you pay off the smallest balance first. It will give you psychological motivation when you see your debt paid off." The second option: List debts in order of interest rate, and attack whichever debt has the highest rate until it's paid off, then move to the next-highest, and so on. That method may lack quick emotional gratification, but it always gets you out of debt fastest.
2. The phantom payment: A late fee you weren't expecting.
Ever pay your credit card bill online, only to realize that the payment never went through? Or send along a snail mail payment that goes missing? All of a sudden, you're hit with a late payment fee (and possibly even a drop in your credit score), and it wasn't even your fault. Although it doesn't seem fair, the onus is still on you to keep track of your payments. "If you're cutting it so close that your payments are arriving the day before or on the actual due date, then you really need to reconsider when you're sending the payment," says Ulzheimer. The CARD Act gives us a 21-day grace period, he says, so you should think about mailing the check or paying online at least a week in advance of the due date. If you've set up online access to your account, you can check to see if the payment has been applied.
What to do: As far as having the fee removed, you can certainly plead your case if your account is in good standing, says Grosz. "To get a fee removed, the best recourse is contacting the company and ask for them to remove the fee. Let them know you did make the payment on time as you usually do, but because of an unexpected glitch, it was received late," she says. In the future, to ensure you are not late on your payment, consider signing up for automatic bill paying.
3. Invasion of the credit card snatchers: "I don't remember charging that!"
If you see a charge that you don't recognize, do not panic, says Ulzheimer. "Just because you don't recognize the merchant doesn't mean you've been a victim of ID theft," he says. "Many merchant charges will show up on your statement with the corporate name, which isn't necessarily their 'brand" name.'" For example, Ulzheimer says his gas station purchases show up on his credit card statement as "Hawthorne Investments."
What to do: For every odd charge, be sure to do your due diligence and call the issuer to ask for the address of the merchant to jog your memory, advises Ulzheimer. If it ends up being a charge you did not make, alert your creditor right away. "Thanks to the Fair Credit Billing Act, your liability is no more than $50, and most of the time the issuer waives that fee," he says. From there, you and the issuer can decide if a new card number is necessary.
4. Demonic shopping possession: A charge that your kid racked up online.
Sometimes convenience can cost you, such as if your kid figures out how easy it is to do a one-click purchase on your Amazon account. "Most online retailers offer multistep purchase approvals, but what's to say your 5-year-old won't just click through the transaction and still complete the purchase process?" says Ulzheimer.
What to do: Unfortunately, there's not much you can do beyond returning the merchandise to get a refund. But you can launch a pre-emptive strike by turning off all one-click ordering options, says Grosz. It's also best not to save your credit card information on retailer sites, especially if you have a little shopaholic in your household.
5. A zombie charge that won't die: A subscription you no longer want automatically starts or renews after a trial period.
This is very common in the credit monitoring world, warns Ulzheimer. "And, many companies do not provide you with a 'we're about to bill you' notice," he says. So here's his rule of thumb: "If you're being offered a 'free' trial to a service and it requires a credit card, then it's not a free trial ... it's conditionally free."
What to do: Contact the subscription customer service to ask for a credit or prorated credit, advises Grosz. "Explain you would like to cancel your subscription because of -- insert reason, such as unhappy with the product, no longer interested, etc. If they refuse, explain that you will dispute the charge with your card issuer." Most of the time, the company will refund your money if you call and challenge their billing practices. In the future, the best thing to do is keep better track of all your subscriptions by noting the exact date you will be billed, and maybe setting an alert on your phone or email, says Grosz. "You can even ask the company to email you the subscription renewal date to have for your records," she says.
Although credit card statements can send chills up your spine, it's important that you face your fears and look them over. Otherwise -- like a bad horror movie cliche -- you won't be able to outrun the credit demons.See related: Free trial offers can bring unwanted credit card charges, 12 tips for automatic bill-paying, An interactive look at your new credit card statement
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