#5: Famous $50 Steak Dinner
Wonder when the first dining charge was left on a credit card? Frank McNamara, a credit executive, sat down for dinner in 1949 with Alfred Bloomingdale (yes, that Bloomingdale). When McNamara discovered he forgot his wallet, he made sure that no other executives would be embarrassed: he invented the Diners’ Club Card. Today, you can charge inexpensive dinners, too. At Blippy, more than 700 consumers posted they had recently used plastic to buy Chipotle burritos.

#4: The $5,515 Nip and Tuck
Records show a woman in England used plastic for…plastic surgery. Hollie Henderson chalked up a $130,000 balance for post-partum corrective surgery. Meanwhile, at Blippy.com, Eric Ryan Harrison posted his $5,515, charge for his wife’s procedure at Augusta Plastic Surgery. Nice to tell everyone, Eric!

#3: $25,000 for a Car and Rebate
Today, most people don’t have the credit line to buy a new car outright. But, a few years ago, thanks to low interest rates and cash back rewards, Blippy posters Marc and Angel grabbed a 2007 Honda and a nifty $500 cash back reward.

#2: $98 to Get Hitched
Couples in America typically spend about $27,800 on their wedding, according to a survey by The Knot. Some enjoy a simple ceremony: Blippy member Nils Johnsonposted a $98 credit card purchase for a city hall wedding ceremony in San Francisco. But, not long after, the penny pinching ended. His online reports suddenly showed pricey spending at Sephora and Gilt Groupe. Ain’t marriage grand?

#1: $2.5 million for Original Art
Love Roy Lichtenstein? Not as much as art collector Eli Broad. In 1995, he earned 2.5 million frequent flyer miles by bidding on and buying Lichtenstein’s, “I…I’m Sorry” at Sotheby’s. Broad donated the miles to his favorite charities, but he probably ruined reward card programs for all of us!

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So… I dug around in our file cabinet and located one such agreement from Chase, with an effective date of 10/2004. As such, these terms probably aren’t 100% up-to-date, and don’t necessarily apply to you even if you have a Chase card. I’m mainly posting this information here to give you an idea of the sorts of protections that card issuers build into these things. Regardless of the issuing bank, you’ll find that these sorts of agreements say much the same thing.

I should also note that this particular agreement spans twelve (!) pages, so I’ll just skimming through and hit some key points. Pay particular attention to the ninth clause — it essentially says that they can change the agreement whenever they want. Here goes…

1. ACCEPTANCE OF THIS AGREEMENT

…You will be bound by this agreement if you or anyone authorized by you use your account for any purpose, even if you don’t sign your card.

In other words, the first time you swiped your card, you agreed to be bound by these terms. I hope you read them so you knew what you were getting yourself into…

The next section, 2. USING YOUR ACCOUNT, covers permissible transactions, authorized users, etc. Of particular interest is the following passage about credit lines:

At our discretion, we may increase, reduce, or cancel your credit line, or the cash advance portion of your credit line, at any time. However, if you have not asked us to do so, we will not increase your credit line. A change to your credit line will not affect your obligation to pay us.

So yes, they can reduce your credit line whenever, and and for whatever reason they want. Interestingly, Chase won’t (or at least didn’t back when these terms were first written.

The third section, 3. PAYMENTS, talks at length about where to send your payments, minimum payments due, etc. This is relevant to the recent Chase revelation that they’re increasing the minimum amount due for a subset of customers. But remember, they reserve the right to change these terms whenever they want, so doing they were well within their rights to do this.

The fourth section, 4. FINANCE CHARGES, details their standard APR calculations, how their variable rates work, the fact that they can apply a “default rate” if you don’t honor the terms of the agreement, etc. They refer to the “Rates and Fees” table that is available separately for details surrounding the actual rates. But again, everything listed here and in that table is subject to change.

The fifth section, 5. OTHER FEES AND CHARGES, talks about late fees, annuals fees, overlimit fees, etc. If it’s a fee, it’s covered here. And because they have the right to change the agreement (yes, I realize that I’m starting to sound like a broken record), they can add, subtract or modify fees whenever they see fit.

The sixth section, 6. DEFAULT/COLLECTION, talks about what happens if/when you stop paying. It’s short and sweet, and you really don’t want to run afoul of them here.

Next up, and relevant to the fact that some issuers have started closing dormant accounts…

7. CLOSING YOUR ACCOUNT

You may close your account at any time. If you call us to close your account, we may require that you confirm your request in writing. We may

We may close your account at any time or suspend your credit privileges at any time for any reason without prior notice except as required by applicable law. If we close your account, we will not be liable to you for any consequences resulting from closing your account or suspending your credit privileges.

If you or we close your account, you and any authorized users must immediately stop using your account and destroy all cards, checks or other means to access your account or return them to us upon request. You will continue to be responsible for charges to your account even if they are made or processed after your account is closed and you will be required to pay the outstanding balance on your account according to the terms of this agreement. In addition, to the extent allowed by law, we may require you to pay the outstanding balance immediately and charge the default rate if we don not receive payment within the time we specify.

So… They can shut down your account for pretty much any reason, and the balance must be repaid under “the terms of this agreement” (which they can change at any time and for any reason; see below). They can also require immediate payment “to the extent allowed by law.” I’m not sure what the laws in this area say, but I suspect that their giant team of attorneys knows them inside and out.

After that comes an enormous section called 8. ARBITRATION AGREEMENT. This section spans more than two pages, and it essentially says that disputes will be resolved by binding arbitration, and that such arbitration replaces the right to go to court. There are some instances when it seems like you might be able to take legal action against them, but they’ve done a pretty good job of painting you into a corner. They even go so far as to rule out class action lawsuits, saying that any instances of legal action will be limited to individual actions.

And now for the big one… The one clause that rules them all…

9. CHANGES TO THIS AGREEMENT

We can change this agreement at any time, regardless of whether you have access to your account, by adding, deleting, or modifying any provision. Our right to add, delete, or modify provisions includes financial terms, such as the APRs and fees, and other terms such as the nature, extent, and enforcement of the rights and obligations you or we may have relating to this agreement. Modifications, additions, or deletions are called “Changes” or a “Change.”

We will notify you of any Change if required by applicable law. These Changes may be effective with notice only, at the time stated in our notice, in accordance with applicable law. Unless we state otherwise, any Change will apply to the unpaid balance on your account and to new transactions. The notice will describe any rights you may have with respect to any Change, and the consequences if you do or do not exercise those rights. For example, the notice may state that you may notify us in writing by a specified date that you do no want to accept certain Changes we are making. If you notify us in writing that you do not accept the Changes, your account may be closed (if it is not already closed) and you will be obligate to pay your outstanding balance under the applicable terms of the agreement. If you do not notify us in writing by the date stated in the notice, or if you notify us but then use your account after the date stated in the notice, you will be deemed to accept all Changes in the notice and to accept and confirm all terms of your agreement and all Changes in prior notices we have send you regardless of whether you have access to your account.

Okay, they can change your terms whenever they want, and they’ll only notify you if required by law. And guess what? These changes will likely apply to your existing balance as well as to new purchases. You may be allowed to opt out (in writing) from changes to the agreement, in which case you’ll be allowed to repay under the terms of the existing agreement. It’s unclear to me how these things apply to promotional offers, as they’re not explicitly mentioned.

The are a number of additional sections, including the following:

10. CREDIT INFORMATION
11. NOTICES/CHANGES OF PERSONAL INFORMATION
12. TELEPHONE MONITORING AND RECORDING
13. ILLINOIS CARDMEMBERS: INFORMATION SHARING
14. ENFORCING THIS AGREEMENT
15. ASSIGNMENT
16. GOVERNING LAW
17. FOR INFORMATION
18. YOUR BILLING RIGHTS

However, there’s nothing particularly germane in them, so I’m not going to delve into them.

The bottom line here is that credit card issuers make (and can change) the rules, so be sure to read them carefully before agreeing to them. While their changes might seem unfair or arbitrary, they’ve gone to great lengths to ensure that they have the right to make them.

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Alternatively, if you follow this link, you can sign up for a free trial of Score Watch, which will give you unlimited access to TransUnion credit report and TransUnion FICO score for 30 days. If you’re interested in the free trial, then…

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» Privacy Policy
» Terms of Service

They cannot require you to provide personal information (phone number, driver’s license number, etc.)

They cannot require you to present an ID.

They cannot require a minimum charge (though many do).

They cannot charge extra for using a credit card. Credit card companies levy a processing fee on the merchant, and they cannot (directly) pass this on to you.

They cannot require you to present a credit card as ID when writing a check.

If you run into trouble with a merchant that violates these terms, you can report them to Visa, MasterCard, or American Express.

Letters can be sent to the following addresses:

Visa USA
Consumer Relations
P.O. Box 8999
San Francisco, CA 94128

MasterCard International
Public Relations
2000 Purchase Street
Purchase, NY 10577

American Express
Customer Service
PO Box 297812
Ft. Lauderdale, Fl 33329-7812

Or… You can call AmEx between 8AM and Midnight EST at:

1-800-297-1234 (U.S.)
1-336-393-1111 (collect)

But the most effective thing that you can do if a merchant is uncooperative is to simply shop elsewhere.

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As a followup, I just wanted to point out a NY Times article on the same subject that claims that credit cards often transmit your data unencrypted. The test described in this article was based on a sample of 20 credit cards from Visa, MasterCard, and American Express.

Unfortunately, the article didn’t actually provide details on how many of the cards that tested failed to encrypt the data, so it’s hard to determine how widespread this problem is. Moreover, that article is over two years old, and it’s unclear (at least to me) how much things have changed with regard to the RFID technology that card issuers are using. It’s also worth noting that this study was carried out by a company that specializes in data encryption techniques (RSA), so it’s not exactly unbiased.

Nonetheless, a recent article over at BoingBoing.net talked about how to steal unencrypted data from an RFID-enable credit card using just $8 worth of gear. While others have claimed that the risks associated with unencrypted data are incredibly slim, it amazes me that credit card issuers wouldn’t implement at least rudimentary security features when designing these cards.

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Who can apply for business credit cards?

As it turns out, anyone can apply (and be approved) for one. You don’t have to have own an “official” business at all. When filling out the application, simply enter your own name for the business (or dream one up if you wish) and use your social security number as the tax ID number (if they ask for one).

Is this legit?

The short answer is “yes.” This is totally legit because any individual can operate as a sole proprietor. There’s no need to file any paperwork, pay any registration fees, etc. You’re a sole proprietor if you say you are.

Want more justification? Maybe you occasionally sell things on eBay. Or maybe you specialize in family accounting (your family’s accounting – you balance the checkbook, right?). Or lawncare — you mow the lawn, right? If so, then you can choose to view yourself a business.

Unless you go to the trouble of registering a business name (and there’s really no need), the name of your business is the same as your legal name. Similarly, if you don’t register for a tax ID number, then your TIN is the same as your SSN. In this case, there is no real distinction between you and your sole proprietorship.

Why would I want a business credit card?

The main reason that an individual might want to apply for a business credit card is to take advantage of special introductory offers. For example, many business credit cards come with a 0% balance transfer offer. Likewise, a number of the most generous credit card signup bonuses are associated with business credit cards.

See also: Best Business Credit Cards

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Here’s what they had to say about card security:

The contactless cards use secure data transmission. All information that is transmitted is subjected to 128-bit encryption.

The contactless card never transmits your credit card number. Rather, your card transmits a unique number for each transaction. If someone intercepts that number, it would be useless even if they could decrypt it.

Another thing to keep in mind is that card issuers typically extend the same sort of fraud protection whether or not you swipe your card.

The article also argued that contactless cards are faster to use. Cash transactions take and average of 34 seconds. Transactions in which you swipe your card take an average of 25 seconds. But contactless credit card transactions take an average of just 15 seconds.

Beyond all of this, contactless cards remove one major headache associated with “old school” credit cards — the magnetic strip never goes bad. In fact, I’m currently carrying around an Amex Blue Cash Rewards card with a sketchy magnetic strip. I need to call and get it replaced, but just haven’t found the time.

I’m still not sure how I feel about all of this — and I’ve never actually used the RFID feature. In fact, I just discovered that my Chase Freedom card has this ability.

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How secured credit cards work

Secured credit cards are typically backed by a deposit account owned by the cardholder. In short, the cardholder deposits a specified amount of money from which the card issuer can recover funds if the cardholder defaults on their obligations.

Credit limits on secured credit cards vary. limits equal to 100% of the deposited amount are common. However, it’s not unheard of to require customers to put anywhere from 10% to 200% of their limit on deposit, with lower risk borrowers landing at the low end of this range, and higher risk borrowers at the high end.

While the deposit is held by the credit issuer as collateral for what’s owed, it typically isn’t debited for individual missed payments. Rather, the deposit is generally only used to offset amounts owed when the account is closed, either by the cardholder or, in the event of severe delinquency, by the credit issuer.

The downside to this approach is that the account will continue to accrue interest and fees for up to six months before the deposit is used to offset the amount owed. It is therefore conceivable that the amount owed will ultimately outstrip the amount of the deposit, leaving the cardholder with additional debt even after the deposit is forfeited. Obviously, this is good for the card issuer and bad for the cardholder.

So why would someone opt for a secured credit card?

The main reason someone would apply for a secured credit card is that they’re easier to get than a “regular” (i.e., non-secured) credit card if you have a poor credit history, or if you’ve never had credit before. Unfortunately, fees and service charges associated with secured credit cards often exceed those for non-secured credit cards.

Regardless, secured credit cards can be a useful tool for rebuilding your credit if you’ve run into trouble in the past. They also provide cardholders with the convenience of being able to pay with plastic at any merchant that accepts Visa or MasterCard, though the same sort of convenience could be achieved through the use of a Visa- or MasterCard-branded debit card.

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Did you know that merchants can’t require you to show an ID in order to complete a transaction?

According to a recent Q&A in the Baltimore Sun:

Although Visa rules do not preclude merchants from asking for cardholder ID, merchants cannot make an ID a condition of acceptance. Therefore, merchants cannot refuse to complete a purchase transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures.

As for MasterCard:

A merchant must not refuse to complete a MasterCard card transaction solely because a cardholder who has complied with the conditions for presentment of a card at the POI [point of interaction] refuses to provide additional identification information, except as specifically permitted or required by the Standards. A merchant may require additional identification from the cardholder if the information is required to complete the transaction, such as for shipping purposes.

Apparently, American Express and Discover have similar rules.

There are, however, some exceptions… For example, they can ask to see an ID if your card isn’t signed. And if you’re paying remotely, like over the phone or on the web, they can ask for identifying information such as your zip code (I’ve also seen on this on pay-at-the-pump transactions).

Of course, this doesn’t mean that all businesses follow the rules. If a merchant demands to see your identification, and then refuses you service if you fail to comply, your only real recourse contact the card company and provide them with the name of the business. Most card issuers will initiate an investigation and may even penalize the business for violating their merchant contract.

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From Visa’s merchant contract:

Dollar Minimums and Maximums – Always honor valid Visa cards, in your acceptance category, regardless of the dollar amount of the purchase. Imposing minimum or maximum purchase amounts is a violation.

From MasterCard’s merchant contract:

The merchant must honor all valid MasterCard cards without discrimination when properly presented for payment. The merchant must maintain a policy that does not discriminate amount customers seeking to make purchase with a MasterCard card. A merchant that does not deal with the public at large (for example, a private club) is considered to comply with this rule if it honors MasterCard cards of cardholders that have purchasing privileges with the merchant.

From Discover’s merchant contract:

You may not require that any Cardmember make a minimum dollar purchase in order to use a Card and, other than when we have not authorized a Cardmember’s transaction, you may not limit the maximum amount that a Cardmember may spend when using a Card.

So there you have it. The next time a cashier tells you that your purchase has to total a certain amount before they can accept your credit card, you’ll know that they’re blowing smoke. Of course, there’s little you can do if they hold their ground — and most will, as they’ve likely been instructed by their boss that they’re not allowed to accept credit cards for purchases under a certain amount. In such cases, your only real recourse is to contact the card issuer and report the problem.

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