A Closer Look at Credit Cards

Myth: There’s No Way Your Issuer Is Going to Reduce Your Fees or Increase Your Credit Limit

Fact: Believe it or not, it’s possible—and even quite likely—to get various goodies from your credit-card company. If you make a payment just a few days late, reiterate your generally responsible payment history to the company representative and you may get a fee reduction, says Curtis Arnold, the founder of U.S. Citizens for Fair Credit Card Terms, an advocacy group based in Little Rock. You can also finagle a lower interest rate this way. Suggest that you have been getting attractive competing offers. Tell the representative that you would like to stay on as a loyal customer but that you are weighing your options and want to know what her company can do for you.

To get your credit line increased, “start by requesting a relatively small amount, like $1,000, as opposed to $5,000,” says Arnold. If you don’t make any progress with customer service, don’t despair. Stay on the line and ask to speak with a supervisor. Keep in mind, however, that if you have maxed out your card, have poor credit, habitually skip payments, or are relatively inactive, your issuer probably won’t do you any favors. In fact, trying to negotiate could backfire, says Detweiler: “They might review your file and choose to lower your limit or close the account.”

Myth: When You Make a Purchase, There’s No Difference Between Using a Debit Card and a Credit Card

Fact: Debit cards have their benefits: Unless you overdraw, you can’t spend more money than the amount in your bank account, and you don’t have to worry about late fees or interest rates.

However, credit cards are still more reliable in a variety of ways. For starters, federal law affords credit-card consumers better protection. While credit users’ obligations are capped at $50 if fraud occurs on a card, debit-card users can be on the hook for $500 if they don’t report deceptive behavior within two days of learning about it. (Worse, they face unlimited liability if they wait more than 60 days.) A credit card should be used for online purchases and big-ticket items (furniture, vacations), since the credit-card company will refund your money if the item you purchase has been misrepresented. This is not the case with a debit card.

Additionally, when you use a debit card to buy gas, reserve a hotel room, or rent a car, the merchant can place a hold on your account without your knowledge. “In cases where the final purchase price is unknown at the exact moment of the swipe, the merchant can reserve more money for itself than you actually spend,” says Sherry. While a gas station might freeze $100 (even if you bought only $5 worth of gas), a hold at a car-rental counter could amount to hundreds of dollars, and at a hotel, it could be thousands. The hold can last a couple of days, says Sherry, and could result in your unknowingly overdrawing the account.