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credit & debt

How Your Credit Card Can Protect You

More than a convenient way to pay, it also comes with valuable consumer benefits.

Disputing an error. When you see a mistake on your credit card bill, don't delay: The law gives you 60 days after an error appears on your statement to take it up with your card company. Many issuers will encourage you to try to resolve the problem with the merchant first. Also, make sure the charge is a mistake and not an unfamiliar name for a legitimate charge. To enjoy the benefits of the Fair Credit Billing Act, including a temporary credit to your account for the amount in question, you will need to contact your issuer. And if you suspect fraudulent activity, contact the issuer immediately.

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You will likely have the option of registering the dispute online, by phone or by mail. Writing to your issuer preserves your billing rights, and you can more easily document the dispute as well. Remember that even though you don't have to pay the disputed amount during the investigation, you must pay the remainder of your balance. Whether or not the dispute wraps up in your favor, be sure you receive a written explanation from your issuer. And if your claim is rejected, you may have to pay any interest that accumulated on the charge.

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Weekend due dates. Due dates must land on the same day every month, with a cut-off time no earlier than 5 p.m. If the due date falls on a day that mail is not delivered, an online payment must still arrive by the due date, but a check is on time if it arrives the following business day. Don't play chicken: Allow sufficient time for your check to be delivered or your online payment to clear. First-time offenders might have luck asking their issuer to waive any late fees.

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Late-fee limits. Late fees are levied when you pay less than your minimum by the due date or you miss a payment altogether. A late fee may not exceed your minimum payment, but the cap can move up or down with inflation. For 2016, your first late fee maxes out at $27; subsequent offenses—for late payments within the following six cycles—can be punished by a $37 fee.

Falling from grace. Many credit cards offer a grace period—the interval between your statement closing and your due date—during which you can pay your bill and not incur interest. But if you fail to pay off the entire balance by the due date, you lose the entire benefit, so both your unpaid balance and new charges will start accruing interest immediately. Many credit card issuers will restore your grace period if you pay your balance in full two cycles in a row. Also, disputing a charge won't affect your grace period.

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