How to Report Visa and MasterCard Violations

In the past week, I’ve written up the credit card acceptance guidelines for both Visa and MasterCard. But what if a merchant doesn’t follow the guidelines? What recourse do you have?

In short, you can report them to Visa or MasterCard and (hopefully) corrective action will be taken. Here’s how to get in touch with the two companies…

Reporting Visa credit card violations

Perhaps the easiest way to get in touch with Visa is to call them at 1-800-VISA-911. Alternatively, you can call the number on the back of your card.

If you would prefer to send a written complaint, you can address it to:

Visa U.S.A. Inc.
P.O. Box 194607
San Francisco, CA 94119-4607

You might also be able to register your complaint online through your card issuer’s website, but Visa doesn’t have a centralized way of doing this.

Reporting MasterCard credit card violations

Once again, you can call in your complaint to 1-800-MASTERCARD, or you can call the number on the back of your card.

Alternatively, you can register your complaint online via the MasterCard Merchant Violations page. You’ll be asked for your name and address, details about the merchant, and the nature of the problem. There is also space for freeform comments.

Have you ever reported a merchant?

Have you ever reported a merchant for violating the terms of their credit card agreement? Perhaps they required ID, attempted to add a surcharge to your purchase, or tried to enforce a minimum purchase amount.

If so, please share your experience in the comments.

Published on March 5th, 2010 - 17 Comments
Filed under: Credit Cards
 email this article - bookmark it

MasterCard Credit Card Acceptance Guidelines

Last week I wrote about Visa’s credit card acceptance guidelines. This week, I thought it would be interesting to take a look at MasterCard’s merchant guidelines.

MasterCard credit card rules

What follows is a synopsis of MasterCard’s rules regarding card acceptance straight from their merchant guide. The rules regarding card acceptance aren’t quite as explicit as Visa’s in some areas, though there are many parallels. Also note that there are many more rules that what I’ve listed below — I tried to filter out the ones with the least everyday relevance.

Honor all cards. Merchants are required to honor all valid MasterCards without discrimination when properly presented for payment. Merchants may not discriminate amongst customers who seek to make purchases with a MasterCard, nor can they discriminate against or discourage the use of a MasterCard in favor of another brand.

Additional cardholder identification. A merchant must not refuse to complete a transaction solely because a cardholder who has presented a card to pay for a purchase refuses to provide additional identification.

Charges to cardholders. A merchant may not directly or indirectly require a cardholder to pay a surcharge or any part of the merchant processing fees charged in connection with a transaction. However, fees are allowable if they are charged regardless of the form of the payment, and merchants can provide a cash discount.

Minimum/maximum transaction amount prohibited. A merchant may not require, or indicate that it requires, a minimum or maximum transaction amount in order to accept a valid and properly presented MasterCard.

Sale or exchange of information. Merchants may not sell, purchase, provide, exchange, or in any manner disclose MasterCard account numbers, transaction details, or a cardholder’s personal information.

Noncompliance assessment. If MasterCard learns of a merchant’s non-compliance to their rules, they will notify the “acquirer” (i.e., the bank that processes transactions for the merchant) and the acquirer must “promptly” bring the merchant back into compliance.

Failure to safeguard account data. If a merchant is found to have violated any of the security rules (there are several listed), MasterCard can impost a noncompliance assessment of up to $100,000 per violation. They also specify the steps a merchant must take if they believe account data has been compromised, including notification of the acquirer withing 24 hours.

There are a handful of other requirements that I’ve heard about with MasterCards that weren’t listed in the their merchant guide. For example, the cards have to be signed to be valid, and so on. Once again, I’m betting that the biggest hot-button issue will be asking for ID, followed closely by minimum transaction requirements.

What’s your biggest annoyance when it comes to merchants accepting (or not) you credit card?

Source: MasterCard.com

Published on March 5th, 2010 - 18 Comments
Filed under: Credit Cards
 email this article - bookmark it

Sallie Mae Introduces High Interest Savings Account

This is interesting… Sallie Mae, traditionally a provider of federal and private student loans, has just entered the retail banking world. Their initial products include a high interest savings account and CDs with fairly competitive rates.

The current rate on their savings account is 1.35% APY, and their CD rates range from 1.50% APY for 12 months up to 3.00% APY for 60 months. The savings account has no minimum balance and no monthly fees. Unfortunately, I couldn’t find any mention of a minimum deposit for CDs. Not surprisingly, all accounts are FDIC insured up to current limits.

In addition to a fairly competitive rate, Sallie Mae Bank will match up to 10% of your Upromise earnings (subject to some restrictions). I don’t have an account with Sallie Mae Bank, so I can’t vouch for their user interface or customer service. If any of you have experience with them, please leave a comment and let us know how you like it.

Published on March 4th, 2010 - One Comment
Filed under: Banking
 email this article - bookmark it

Two Common Mortgage and Housing Mistakes to Avoid

Like millions of other Americans, my wife and I are upside down on our home mortgage – i.e., the amount we owe exceeds our home’s value. If I had it to do over again, rather than buy with $0 down, I would rent, save money, and buy only after it made more financial sense than renting. If only I could go back in time to alter our decision to buy!

Oh well, our plan moving forward is to pay off our mortgage early and stay put until prices trend upward.

As an aside, if you want more information on buying a home vs. renting you can check out Laura’s view of the buy vs. rent dilemma, as well as my opinion on the same thing.

Mistake #1 – Zero down mortgage

So many new homeowners made the mistake of entering into a zero down mortgage. If you cannot afford a down payment of at least 20%, lenders typically require either a 2nd mortgage or carrying private mortgage insurance (PMI).

One positive result of the housing crisis has been a huge scaling back of the zero and low down payment mortgages, which has been a large contributing factor of plummeting home sales. Nowadays people who don’t have any money cannot buy houses. Go figure, right?

2nd mortgages and Private Mortgage Insurance (PMI):

Private mortgage insurance (PMI) is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is unable to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property. Typical rates are $55/mo. per $100,000 financed, or as high as $1,500/yr. for a typical $200,000 loan. (source)

A second mortgage (commonly used as an alternative to PMI) is a secured loan that is subordinate to another loan (your 1st mortgage) against the same property. The 2nd mortgage typically carries a significantly higher interest rate and is typically used as part or all of the 20% down payment. The higher rate is a reflection of increased risk to the lender, and results in much higher interest costs to the borrower over time.

We fell into this trap like so many others. We wanted to get into our new home now, and were ready to employ any creative financing necessary to make it happen… And so we entered into a 2nd mortgage for 25% of the purchase price (75/25 loan.)

To avoid a costly 2nd mortgages or PMI, save at least 20% of the purchase price of the home.

Mistake #2 – Buying high and selling low

Whether you’re trying to time the stock market or time real estate transactions, buying low and selling high should always be the goal. In a bad market the temptation to do the opposite can be powerful.

Take my housing situation, for example. I hate the fact that we have debt at all, and am very tempted to sell, despite the fact that we would have to take a loss! I’m tempted to sell our house for a loss and then rent for much less than our current mortgage payments and pay off our remaining debt while renting.

Though getting out from under the mortgages is tempting, I decided against it for mathematical reasons. If we were to sell now, we would not only lose money on the transaction, but we’d have to pay cash to our lender. If I could wind up even money, I would sell tomorrow. Instead, we are doing the next best thing… Making our 2nd mortgage the next victim of our debt snowball.

The faster we can reduce our amount owed, the sooner we can sell without any out-of-pocket costs. Our hope is that the housing market will bounce back in the mean time, affording us the option to sell for gain.

To avoid selling your home for less than you owe, increase mortgage principal payments and wait for the market to rebound.

It is worth mentioning that we cannot control market conditions, so we should spend our energy focusing on the factors that we can control:

1. Once you have high interest consumer debts under control, focus your debt snowball on reducing your mortgage – and look into refinancing your mortgage to see if rates are attractive as you may be able lock in a lower rate. If you have a 2nd mortgage, pay it off ASAP. Those of you with PMI should also focus on reducing your mortgage principal to speed your ability to drop the PMI once your principal is reduced below 80% of the home value.
2. Make property upgrades that raise the value more than the amount they cost to implement. DIY projects can cost very little, yet yield superb ROI.

In closing…

Most who fall victim to either of these housing and mortgage blunders end up paying dearly. I hope this article will help future homebuyers avoid the same mistakes. For our next home purchase, my wife and I intend to save 100% of our payment before buying… But that is a post for another day!

Published on March 4th, 2010 - 27 Comments
Filed under: Mortgages, Real Estate
 email this article - bookmark it

How to Improve Your Credit Score

Like it or not, your credit score is a very important number. So what can you do if you have a low score and want to improve it? Here are five simple steps that you can take to do just that:

Check your credit report. You’re entitled to a free credit report from each of the major credit bureaus once per year, so there’s no excuse not to do this. But don’t stop there… Be sure to fix any errors that you find.

Start building positive information. If you’ve had credit problems in the past, put that behind you and get back on track with your payments. If you have a secured credit card, be sure that they report your information to the major credit bureaus, as not all of them do.

Try to get negative information removed. Beyond getting inaccuracies removed from your credit report, you might want to try to get legitimate negative information removed. If you’ve been late in the past, but are currently paying on time, call your creditor and ask to have the information removed. They might balk, but it can’t hurt to try. If you have past due accounts, you might be able to negotiate removal of the negative information in return for getting caught up on your payments.

Dispute inaccuracies that can’t be removed. If there’s inaccurate info on your credit report that you can’t get removed, ask the credit bureaus to place the word “disputed” along with a short explanation alongside any items to which you object. They are required to comply. This won’t actual increase your numerical credit score, but it might appease some wary creditors.

Be patient. If you have legitimate negative information on your credit report, you might simply have to wait for it to drop off. Negative information typically remains on your report for seven years, so it might take awhile, but your score will rebound over time if you clean up your act.

So there you have it… Five simple steps to improve your credit score. One last tip is to be very wary if a company offers to help you improve your credit for a fee. There really aren’t any magic bullets here, and you’re perfectly capable of doing pretty much anything that a credit repair outfit can do.

Published on March 3rd, 2010 - 2 Comments
Filed under: Credit Cards
 email this article - bookmark it

Ask Your Bank for a Better Deal

Last fall, my wife and I went into our nearest bank branch to set up a new savings account for a trust that we’re managing. While we were there, the “Personal Banker” told us about a promo that they were running that would give us a higher than typical interest rate.

I can’t remember the details, but it was something like 2%, when the prevailing savings account interest rates (especially at brick and mortar banks) were much lower. Not only that, but he said he could apply it to our existing personal savings account, as well.

When we got up to leave, he said that the promo rate would end in a few months, but that they’re always introducing new ones. Thus, if we’d just call back and ask, he’d go ahead and apply the code for the new promo rate to our accounts.

I recently called him back and he gave us the new promo rate. I forget the details, but it was significantly higher than their “standard” savings account interest rate. All we had to do was ask.

Oh, and just in case you’re thinking that we must have been dealing with some local bank, and that there’s no hope of getting this treatment from the behemoth bank that you’re dealing with… We do all of our “local” banking with Bank of America.

Published on March 2nd, 2010 - 5 Comments
Filed under: Banking, Customer Service
 email this article - bookmark it

Encouraging Family and Friends to Improve Their Finances

Is money a taboo subject with your friends?

I’m not sure about anyone else, but I don’t think it’s taboo to talk about money. I do, however, recognize that it may be awkward and thus considered a bit wrong by someone to talk to others about how they should handle their finances. Thinking back on conversations we’ve had recently, money has often been a part of the subject matter.

I’ve heard friends and family members say they want to improve their finances and then they mention something that completely contradicts their stated goal. It’s kind of like when you hear people say they’re watching what they eat and then you notice that they’ve ordered and eaten their appetizer, entree, dessert, and even sampled on some of yours.

Do you let things like this slide? If not, when do you speak up and make a suggestion? And if you do feel compelled to talk to them, how can you encourage them to actually do something?

I wanted to go over a few topics that have come up in casual conversation when hanging out with our friends. Hopefully you can relate, and may have an insight that could help with these sticky situations.

Vacationing on credit cards

Our friend invited us to join him and his wife for a conference and show in Los Angeles this summer. Since we’ve never been to LA, we thought this might be a great excuse to go, see some other friends we’ve haven’t seen in a while, and have a good time.

Honestly, it sounds like a great idea. I was already thinking about finding a cheap flight and start budget for the trip when our friend interrupted my thoughts. He mentioned that he was putting it all on his credit card to get some rewards.

At first, I thought that seemed fine. After all, we typically reserve hotels and rental cars with a credit card and then pay it off once we get home. Later in the conversation, though, he told us that he’s still in debt from some of his elaborate vacations. He mixes business and pleasure, extending work trips for fun, and it had resulted in five figure debt.

I kind of backed off of even approaching the topic of funding a big purchase with your credit card. I couldn’t think of a way to begin the conversation without putting him on the defensive (which is a natural reaction). As you’ve probably figured, I hate to see people carry high interest credit card debt, and I worry when they use dent to pay for their wants.

Saving up in advance may force you to delay your purchases, but once the purchase has been made, the hard part is over. You can enjoy your TV or vacation and not worry about how you’re going to pay it all back. We mentioned to him is that we’d definitely like to go, but we’ll need to check our budget and set aside money. I think was probably the best approach in this situation because we’re not going to convince someone in one conversation to change their spending habits. We can, however, show him how budgeting can make it possible to have a debt free vacation.

Creating a budget (and sticking to it)

I’ve heard a few of my friends say that they find it impossible to budget. Like the latest diet or fitness routine, they start off gung-ho with a ‘perfect’ budget that accounts everything to the last penny. They soon wind up going off budget, however, and either wind up back where they started or worse.

This is something I completely understand. I empathize with them on how hard it can be to budget. The most common mistake is that their system is too strict and there is not cushion between what should happen and what actually happens.

I feel a bit better about how we usually handled this because we gave them a couple of tools that have helped us personally with our finances. I also told one friend some of my mistakes with my first few attempts at budgeting and how automating our bills has made it much easier to stay on track.

I think this has been the easiest financial topic for helping other to change their personal finance habits since many people can relate to how hard it can be to start.

Building an emergency fund (only for emergencies!)

Another topic I hear a lot is creating an emergency fund. It can be hard to stay on top of bills while setting aside money in a savings account, but you have to do it. I’ve had some friends lose their jobs or have their hours cut, so I know how important this can be.

I had a friend that was living paycheck to paycheck and wanted to have some money tucked away for an emergency. She had just recently gotten her jobs (yes, she went from no jobs to 2 jobs) and didn’t want to wind up back in the predicament that she just got out of. Whenever people ask for ideas or advice, I take it as a green light to give them some tips that can help them right away.

I suggested that she cut down on things that she doesn’t really care about and use that money to start her emergency fund. It wasn’t a big step (she’s going to stop buying so many magazine at cover price), but it’s a sustainable way to fund her savings.

I also talked to her about using money management tools like Quicken or Mint to see where she could adjust her budget and save some more money. We compared options for different savings accounts. Even though ING Direct (where we bank) offered a high interest savings account, she felt more comfortable at her local credit union (another good option).

The good news is that I was chatting with her again a couple of weeks ago, and she now has two months of expenses tucked away. It felt good to help a great friend and she appreciated the suggestions. If only it was like this every time!

Your Thoughts

How do you handle money discussions with your friends and family? What are some ways you’ve helped others? What are some mistakes you’ve made when talking about finances?

Published on March 2nd, 2010 - 19 Comments
Filed under: Miscellany
 email this article - bookmark it

How Do You Know if a Credit Card Number is Valid?

As a followup to my recent post about what your credit card number means, I wanted to throw out a bit more credit card trivia and talk about how you can tell if a credit card number is valid.

As you may or may not aware, most credit card numbers are generated based on something known as the Luhn algorithm. It thus stands to reason that a credit card number is valid if (and only if) it satisfies the “Luhn check” (a.k.a., the Mod 10 check), which is a simple mathematical test that involves manipulating the credit card number, adding it up, and checking to see if it’s evenly divisible by ten.

Testing credit card numbers

Here’s how to apply the Luhn check to test whether or not a credit card number is valid:

• Step 1a. For a card number with an even number of digits (e.g., Visa or MasterCard), double alternating digits starting with the first digit in the sequence.
• Step 1b. For a card with an odd number of digits (e.g., American Express), double alternating digits starting with the second digit in the sequence.
• Step 2. If the doubling resulted in a number with two digits, add them together to get a single digit number
• Step 3. Now go back to the original credit number and replace the digits that you doubled with the new value — either the doubled value, or the doubled value with the digits added together — and add it all up.
• Step 4. Check to see if the sum is evenly divisible by 10 (you can simply look to see whether or not it ends with a zero).

If the card number does not pass this check, then it is not a valid number. If, on the other hand, it does pass, then it may be a valid number.

Checking validity: an example

Those steps are a bit convoluted, so here’s a real world example… The following credit card image comes from the CitiCards homepage for their Platinum Select MasterCard. The number on the card is 5424 1801 2345 6789. For starters, the fact that the number starts with a “5” indicates that it’s a MasterCard (as does the little MasterCard symbol on the card).

Since there are sixteen digits, we’ll start by doubling the 1st, 3rd, etc. digits and then summing as outlined above. I’ve highlighted the doubled (and in some cases summed) values in parentheses, below. I’ve also underlined the check digit.

(1+0) + 4 + (4) + 4 + (2) + 8 + (0) + 1 + (4) + 3 + (8) + 5 + (1+2) + 7 + (1+6) + 9

This totals up to 70, which is evenly divisible by 10. In other words, this is a potentially valid credit card number, though I’m sure it doesn’t correspond to a real account number. If it does, then L. Walker (the name on the card) probably isn’t too happy about his/her credit card number being spread around like this.

Published on March 1st, 2010 - 6 Comments
Filed under: Credit Cards
 email this article - bookmark it

What Do Credit Card Numbers Mean? Making Sense of Your Credit Card Number

Have you ever wondered what those numbers embossed on the front of your credit card mean? Commonly referred to as your “credit card number,” there is a lot more information packed into that number than meets the eye… If you have a credit or debit card, you might want to pull it out so you can follow along.

For starters, the first digit in the number indicates what type of card you’re dealing with. This number is always a 3, 4, 5, or 6, and can be interpreted as follows:

3 = Travel or entertainment card (e.g., Amex or Diner’s Club)
4 = Visa Card
5 = MasterCard
6 = Discover Card

Visa credit card numbers

For Visa cards, the numbers are 16 digits long. Visa has used to have 13 digit numbers, as well, but those have been mostly (completely?) migrated over to the 16 digit format.

When looking at the balance of the numbers, the 2nd through 6th digits are the bank number, and the 7th-15th numbers are your account number. The remaining digit is known as the “check digit,” which is used to help determine whether or not the overall number is legitimate.

MasterCard credit card numbers

For MasterCard cards, the number is also 16 digits long. The first digit is always a 5 and the second digit is always between 1-5. The 2nd-3rd, 2nd-4th, 2nd-5th, or 2nd-6th digits correspond to the bank number, and the remaining digits up through the 15th are the account number. As above, the 16th digit is the check digit.

American Express card numbers

For American Express cards, the number is always 15 digits long and it always starts with 34 or 37. The 3rd and 4th digits indicate the card type (business vs. personal) and the currency. The 5th-11th digits are the account number, the 12th-14th digits are the card number associated with the account, and the 15th digit is, once again, the check digit.

As an example, my wife and I have an Amex Blue Cash Rewards account. Our card numbers start with 37, and the 12th-14th digits on our cards are different. The rest of the digits are, however, the same. As far as I’m aware, both Visa and MasterCard issue identical numbers when there are multiple cards per account.

Source: How Stuff Works, Credit Addict

Published on February 26th, 2010 - 19 Comments
Filed under: Credit Cards
 email this article - bookmark it

Visa Credit Card Acceptance Guidelines

I was recently digging around for information on the Visa website when I ran across a document containing the Visa card acceptance guidelines for merchants. It includes some pretty interesting information that I thought was worth sharing.

Visa credit card rules

What follows is a summary of Visa’s rules regarding card acceptance. I’ve mentioned some of these things in the past, but ultimately decided that it’s worth having them all in one place.

• Merchants can choose to honor all Visa cards, Visa credit and business cards only, or Visa consumer debit and prepaid cards only.
• Merchants must always honor valid Visa cards in their acceptance category regardless of the dollar amount of the purchase. Minimum and maximum purchase amounts are a violation of Visa rules.
• Merchants must always treat Visa transactions like any other transaction (with a minor exception). They may not impost a surcharge for using a Visa card, but can offer a cash discount. This discount cannot be offered for use of a “comparable card” such as a different credit card.
• Merchants who offer an alternate payment channel, such as telephone or online, are allowed to add a convenience fee as long as it is disclosed, never applied to face-to-face transaction, applied to all forms of payment through the alternative channel, etc.
• Merchants must include all applicable taxes in total transaction amount, and may not collect taxes separately in cash.
• Restaurants, cab drivers, etc. can only authorize an account for the known amount, not for the transaction amount plus estimated tip.
• Merchants may not provide cash refunds for merchandise originally purchased with a Visa card.
• Merchants must deposit their Visa transaction receipts within five calendar days.
• All electronic POS terminal are required to provide account number truncation, such that only the last four digits of the credit card number are printed on the customer’s receipt. The expiration date should not appear.
• Merchants must keep cardholder account number and personal information confidential.
• Return/exchange policies must be properly disclosed before a transaction is completed, or made available online or via mail for “card-absent” transactions.
• An unsigned credit card is invalid and should not be accepted. If an unsigned card is presented, the merchant should check the cardholder’s ID, ask the customer to sign the card, and compare the signature to the one on the ID.
• Writing “See ID” or “Ask for ID” is not a valid substitute for a signature. The customer should be asked to sign the card, as outlined above.
• Visa rules do not preclude merchants from asking for cardholder ID prior to completing a transaction, but merchants cannot make the presentation of ID a condition of acceptance.

I don’t know about you, but I’m regularly asked for ID when I make purchases, and I don’t mind. In fact, I’m one of those people carrying around an invalid card because I chose to write “Ask for Photo ID” on the back instead of signing it.

My biggest complaint is when a merchant enforces a minimum purchase requirement. While I fully understand that even small purchases are accompanied by significant processing fees, nothing frustrates me more than getting to the register and being told I can’t use a credit card unless I spend more money.

At the same time, it’s important to recognize that the cashier doesn’t make the rules and is just trying to do his/her job. Thus, if you have a problem with a merchant’s policies, it’s best to take it up with a manager and/or your card issuer.

Source: Visa.com

Published on February 26th, 2010 - 21 Comments
Filed under: Credit Cards
 email this article - bookmark it