AllZ Archives | Page 13 of 144

Q: How can you get cash from your credit card?

Yes, you can get cash from a credit card by requesting a cash advance through an ATM, bank branch, or convenience cheque. However, credit issuers may apply a fee and a higher APR for the cash advance.

Mar

2024

Buying Money Orders With a Credit Card: Is it Possible?

By Ashley Kilroy | Credit, Financial Independence | Comments Off

Whether you need to pay your rent or make a large purchase, a money order can be a payment option for completing the transaction. Usually, you must use cash or a debit card to buy a money order. But, if you’re in a financial bind or have some other motivation, using your credit card is sometimes an option.

However, be forewarned: Buying a money order with a credit card can involve getting a cash advance and come at a hefty cost. Here’s what you should know about trying to buy a money order with a credit card.

What Is a Money Order?

A money order is essentially a prepaid check. In terms of how a money order works, it allows one person to securely transfer funds to another person.

• When you send a money order, you must purchase the total amount upfront and specify the person or business receiving the funds. This way, the value is guaranteed to the exact person you intend to receive the money. In other words, the payment won’t bounce since the money is already accounted for.

• When the person receiving the fund picks up the money order, they must show a valid ID to prove their identity and verify the name of the person sending the money order. Requiring this information ensures the money gets into the hand of the correct recipient. Also, it makes it less likely that a thief could take the funds. However, if they do, money orders have receipts so you can track the whereabouts of the funds and potentially recover the money.

How to Use Money Orders

When paying bills or making large purchases, people who don’t have checking accounts can use money orders as an alternative to checks or debit cards. For instance, some people may use a money order to pay rent. In some cases, payees may require you to use a money order as your form of payment.

Since checks have all of your information written on them, some people are wary of financial fraud when using checks. Using a money order may offer peace of mind from knowing their information is not being exposed to fraudsters.

Another use for a money order is to send funds internationally to a friend or family member. Because many money order sellers have locations across the globe, you can usually send funds to plenty of locations worldwide. But, if you choose to send a money order internationally, make sure the person or payee is close to a location where they can receive the funds.

Pros and Cons of Money Orders

There are both pros and cons to money orders. It’s important to weigh both sides when deciding whether a money order is the right solution for you.

Pros

Money orders can come in handy for a variety of reasons. Specifically, their upsides include:

• Offers a secure form of payment: If you send a money order through the mail, it doesn’t provide your private banking details the way a personal check would. Also, not just anyone can take a money order to the bank and cash it like they could if you sent cash through the mail. Further, money orders are more secure than carrying around a large sum of cash, which could be lifted.

• Provides a form of payment for people who don’t have a bank account: For those who don’t have access to a checking account (what’s known as being unbanked), a money order can help them pay bills or complete other transactions. In some cases, payees may require a money order or cashier’s check to guarantee payment. For example, you may use a money order when selling your car to a private party.

• Has recovery options if lost or stolen: Because money orders are traceable, there are processes to recover them if they are lost or stolen. However, depending on the situation, you may have to pay an extra fee to recover the lost or stolen funds. Still, that’s usually better than losing all of your money.

Cons

While money orders have benefits, they also come with some downsides, including:

• Lack of convenience: Unlike other purchases, you must buy a money order in person. So, if you’re in a time crunch, a money order might not be a viable solution. Also, there are limits for the amount you can send via money order. For example, the USPS and most banks limit money order purchases to $1,000. But, you can purchase additional money orders if you need more than the maximum amount. Remember, though, that you will have to pay a fee for each money order you buy.

• High cost: No matter how you decide to purchase a money order, you must pay a fee. If you get a money order from the bank or the USPS, you can expect to pay about $0.50 to $2 per money order.

If you get one from your credit card company, it may be considered a cash advance (more on this in a moment). You can expect to pay a fee of about 5% or $10, whichever is greater. So, if you take out a $1,000 money order, you could pay $50 just for the transaction. Also, you’ll likely have to pay a higher credit card APR for the money order total, even if you have a good APR for a credit card.

• Common scam practice: In some cases, a criminal will send a fraudulent money order for a large sum of money and then request a portion of the proceeds. Before you realize you’ve been duped, the excess funds may have already been deposited in the thief’s checking account.

Can You Buy a Money Order With a Credit Card?

So, can you buy a money order with a credit card? Well, possibly. Some major credit issuers will allow you to buy a money order with your credit card. However, the credit issuers may not treat the money order as they would a usual purchase. Instead, the issuer may treat it as a cash advance, which involves a higher than normal APR.

Recommended: How to Send Money Using a Credit Card

Should You Buy a Money Order With a Credit Card? And How to Do It

Whether you should buy a money order with a credit card depends on your situation. But, before you buy a money order from your credit issuer, it’s wise to understand the drawbacks that come with purchasing a money order from a credit card.

• High cost: As mentioned, you will usually spend 5% or $10 per money order (whichever is greater) depending on the credit card issuer. So, for a $500 money order, you’ll likely pay close to $25. Also, you may have to pay the “cash advance APR,” which is usually higher than your normal purchase APR on a credit card.

• No grace period: With everyday purchases, you usually have a grace period before interest accrues — an essential part of how credit cards work. This usually isn’t the case with cash advances, however. Interest will typically begin accruing right away, meaning your outstanding balance will grow immediately.

• No rewards: Unlike everyday purchases, you won’t receive any bonus points or cash back rewards when you take a cash advance.

• Potential to become a big financial burden: Credit card issuers determine how they allocate your minimum credit card payment. So, let’s say your outstanding balance includes purchases and a cash advance. If your minimum credit card payments are first allocated to purchases, only making the minimum payment may make it almost impossible to repay your total bill since your interest is constantly accruing on the cash advance portion.

After careful consideration, you may decide that buying a money order from a credit card is the most viable option. To do so, you can request a cash advance from your credit issuer. You also can get a cash advance at your local ATM, bank branch, or a loan agency like CashnGo Loans. Make sure you have your PIN if you decide to use a loan agency.

Your credit issuer may also let you use a convenience cheque, which is an option that transfers money from your credit card to your checking account. Essentially, it works similarly to a regular check, except the funds come from your line of credit instead of your bank account.

Once you have the funds from your cash advance, you can go ahead and purchase a money order at an establishment that offers them.

Where Can You Buy a Money Order With a Credit Card?

In the past, companies such as Western Union and 7-Eleven used to let you purchase a money order with a credit card. Now, no company lets you purchase a money order directly with a credit card — even if it’s somewhere that generally accepts credit card payments.

However, Western Union gives you the option to transfer money with a credit card. This means that you can send money through the Western Union app online or in person. Before you send money through Western Union, make sure to check to see if there are other fees associated with this transaction.

You can also get a money order by using your cash advance to purchase one from several establishments such as:

• The USPS

• Select banks, such as Wells Fargo

• Check-cashing stores

• Payday loan locations

• Retailers or grocery stores

Keep in mind that in addition to the fees for the cash advance, you will have to pay the fee for the money order.

What Are the Costs of Getting a Money Order With a Credit Card?

With a cash advance, you usually have to pay a higher rate than the average credit card interest rate on the amount you take out, which will begin accruing right away. Also, your card issuer may apply extra fees, usually 5% of the total amount or $10, whichever is the more significant amount.

You will also have to pay the money order fee since no establishment directly accepts a credit card payment for a money order.

The Takeaway

Money orders can be a safe and secure alternative to cash or personal checks. Some recipients prefer receiving money orders because they won’t bounce and they come with a receipt. However, it’s typically not possible to buy one directly with a credit card. Instead, you would likely have to get an expensive cash advance on your credit card to fund the money order. It’s wise to think twice about using your credit card this way.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can you buy a money order with a credit card at Walmart?

No, you can’t directly purchase a money order from Walmart with a credit card. Instead, you must purchase a Walmart money order with cash or a debit card. However, you can take a cash advance from your credit card company and use the proceeds to purchase a money order.

Can buying money orders with a credit card raise your credit utilization?

Since taking a cash advance requires you to use your line of credit, it will increase your credit utilization rate. Keep in mind if your credit utilization ratio exceeds 30%, your credit score might be negatively affected.

Does paying the minimum balance count toward a cash advance every month?

Not necessarily. Every credit issuer determines how to distribute your minimum monthly payment. Therefore, your credit issuer may choose to put your minimum payment amount toward new purchases before putting funds toward repaying the cash advance. Doing such may make it more challenging to repay your outstanding balance.

How can you get cash from your credit card?

You can get cash from a credit card by requesting a cash advance through an ATM, bank branch, or convenience check. However, take note: Your credit card issuer may apply a fee and a higher APR for the cash advance.

Photo credit: iStock/sturti

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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Mar

2024

Credit Card Expiration Date: All You Need to Know

All You Need to Know About Credit Card Expiration Dates

By Jason Steele | Credit | Comments Off

Credit cards typically expire two to five years after they are issued. The date on the card reflects the final month and year you can make purchases with your card.

Cards have expiration dates for reasons ranging from security to marketing, but issuers are usually very good about sending a new card before the old one is invalidated.

Here’s a closer look at what credit card expiration dates are, why they exist, and what the expiration date on your card means to you as a credit card user.

What Is a Credit Card Expiration Date?

An important aspect of how credit cards work, a credit card’s expiration date represents the last day you can use it for purchases. Consider these details:

• Credit card expiration dates are typically printed as a two-digit month followed by a two-digit year. The last day of the month printed is the last day that you can use your credit card to make new purchases. If you try to make a purchase on the first day of the following month, the transaction will be declined.

• For example, if your card has an expiration date of 06/25, then you can use that card until June 30, 2025. If you were to try to use that card to make a purchase somewhere that accepts credit card payments on July 1, 2025 — or any time thereafter — you could expect a situation wherein your credit card was declined, per credit card expiration date rules.

Fortunately, credit card issuers will typically mail you a new card with a new expiration date long before your card expires — you won’t have to worry about applying for a credit card.

Most card issuers will mail out a new card 30 to 60 days before your old card is due to expire, so you’ll never be without a valid card.

Why Do Credit Cards Expire?

There are several reasons that credit cards expire.

• For one, the credit card expiration date serves as an additional security feature.

• Credit cards also expire so that card issuers can keep track of their inventory and provide customers with new cards with updated features and technology.

• Also, the magnetic stripes and computer chips in credit cards also wear out, so having an expiration date allows card issuers to ensure that cards don’t fail as often.

• Beyond reasons of functionality, replacing credit cards also gives card issuers an opportunity to market new products (and credit card rewards) and update their brand image.

How to Find Your Credit Card Expiration Date

Your credit card’s expiration date will always appear on the card. In most cases, the expiration date will appear on the front of the card, on the right side, below the account number, which you’ll be familiar with if you know what a credit card is.

However, if the account number is printed on the back of the card, then that’s where you’ll most likely find the card’s expiration date.

Keep in mind that this number is separate from a CVV number on a credit card, which is usually a three- or four-digit number without a forward slash in it.

Recommended: How Many Credit Cards Should I Have?

What Happens After a Credit Card Expires

Once your card expires, it is no longer valid for new purchases. However, you should have already received a new card.

After you’ve activated your new card, there’s no reason to keep your old card, and you should destroy it; more on that in a moment. That’s because your old card still has your account number on it, which could help someone to make a fraudulent transaction with your account (though rest assured in this case there’s always the option to dispute a credit card charge).

What to Do When the New Card Arrives

Once you’ve received your new credit card with the updated expiration date, there’s no reason to continue to use your old card.

• You can simply activate your new credit card, and replace your old one in your wallet or purse.

• Your new credit card should have the same terms, including the credit card APR and credit limit.

• Then, destroy your old card. You can destroy your plastic cards by cutting them up with scissors (it’s wise to cut the magnetic chip in half) or by using a shredding machine that’s designed for destroying plastic cards.

If you have a metal card, the card issuer will typically mail you a return envelope to send the card back for destruction.

However, if you haven’t received your new card and you notice your credit card expiration date is approaching, you should contact your card issuer before your old card expires. For example, if you’ve changed mailing addresses, your new card may have been sent to your previous residence. Or, your old card may have gotten lost in the mail. Either way, you’ll want your old card replaced before it expires so that you can continue making charges to it.

Don’t forget: Once you have your new card, you also may need to update any accounts for which you were using your old card for automatic billing every month or every year. This can include everything from streaming subscriptions to utilities. Doing so will ensure that your services remain uninterrupted when your old card does expire.

With your new card up and running, you’ll continue to make at least the credit card minimum payment as you’d been doing.

The Takeaway

Your credit card’s expiration date marks the last date it will still be valid for new purchases. You can find the expiration date on your credit card on either the front or the back of the card, and it will usually appear as a two-digit month followed by a two-digit year. You don’t usually have to worry about taking steps to get a new card when your old one is set to expire — the credit card issuer will usually mail you a card with a new expiration date beforehand. Understanding the expiration date can be an important part of using a credit card properly and easily.

FAQ

Can I still use my credit card the month it expires?

Yes, your credit card will remain valid until the last day of the month it expires. It will no longer be valid on the first day of the following month.

Why do credit cards expire?

The credit card expiration date can serve as an additional security feature, as a way to replace worn magnetic stripes and computer chips in cards, and as an opportunity for card issuers to market new products and update their brand image.

Does your credit card automatically renew?

A credit card account isn’t attached to the credit card’s expiration date. The account usually renews every year regardless of whether the card itself expires. Card issuers also will automatically mail customers new cards within two months of their existing card’s expiration date.

Is it safe to give out your credit card number and expiry date?

For a merchant to accept credit card payments with your card not present, such as with a transaction online or over the phone, you’ll need to give your card’s number and expiration date, among other information. Otherwise, you should keep all of your credit card details private to avoid fraud and/or identity theft.

Do I have to pay off my credit card before it expires?

The expiration of your credit card is unrelated to your payments. You need to make at least the credit card minimum payment each month before your account’s due date. This date doesn’t correlate with your credit card’s expiration date.

Photo credit: iStock/mrgao

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Mar

2024

What Is APR on a Credit Card?

By Alyssa Schwartz | Credit | Comments Off

A credit card’s annual percentage rate (APR) represents the cost of borrowing money from a lender, typically stated as an annual interest rate. Thus, the APR on a credit card is an important number to know before charging a purchase — especially if you plan on carrying a balance on your credit card account.

Read on to learn what APR means on a credit card, as well as when it applies and how it’s determined. You’ll also find out about the different types of credit card APRs you may encounter.

What Is a Credit Card’s APR?

A credit card’s APR refers to the annualized cost of using your credit card to borrow funds. When an individual charges a purchase from a merchant that accepts credit card payments, they’re actually borrowing money from the credit card issuer. The credit card issuer pays the merchant, and the cardholder pays the credit card issuer based on the terms of their credit card agreement.

Depending on the type of transaction and when it’s paid back, some purchases may be subject to interest given how credit cards work. For instance, the purchase APR applies to any balance remaining after the statement due date. Interest is determined based on the credit card’s APR.

How Is APR Determined?

Because actual interest charges are calculated based on the credit card APR, it’s a good idea to get familiar with how APR is determined.

An integral part of what a credit card is, credit card APR is not a set rate that’s the same for every credit card and credit card holder. Rather, the interest rate on a credit card will depend on a number of factors, such as the cardholder’s credit score, what type of credit card it is (for example, whether it’s a rewards card or a card for people with low credit ratings), how the card is being used, and the current economic conditions (such as the prime rate).

In the US, the average credit card interest rate is currently 21.47%, per the most recent data released by the Federal Reserve. That being said, there is a great deal of variance in APRs.

A good APR for a credit card is one that results in the lowest interest charges — which means the lower, the better.

Recommended: What Is a Credit Report?

Types of Credit Card APR

The concept of charging interest on borrowed money is not unique to credit cards. From car loans to mortgages, all types of loans have an interest rate attached. But one way credit card APR differs from the interest rates on some other lending products is that the interest charges on credit card transactions may vary depending on the type of transaction a cardholder makes.

Understanding the different types of credit card APRs can help an individual better anticipate actual interest costs before they apply for a credit card. Here are some common types of APR on credit card purchases.

Introductory APR or Promotional APR

It’s not uncommon to see credit card offers touting no interest — though it’s important to note that 0% APR is not usually a permanent credit card feature.

• If a credit card offers an “introductory” or “promotional” APR, that generally means that the rate offered is only applied for a limited time. After that, the interest reverts to another (typically higher) APR.

• How interest is applied to an introductory or promotional APR period will depend on the specific wording of the offer. For example, if a credit card offers a zero-interest promotional period (“0% APR for X months”), that means no interest is charged during that specified offer period. These periods are typically between six and 18 months.

Once the offer period ends and the APR reverts to the standard rate, interest is only charged on any outstanding balances from the date the promotional period ended. (Other terms, such as always making the credit card minimum payment by the due date, may also apply in order for the promotional rate to be valid.)

• A promotional APR that defers interest doesn’t work in quite the same way. With deferred interest, the promotional or introductory rate only applies if the balance is paid in full by the end of the offer period. But interest on any remaining balance will be calculated based on the date of purchase, not the end of the offer period.

That’s why it’s important to be mindful of whether your spending is within your budget, even if it is technically within your credit card limit.

While the specifics of a promotional or introductory APR offer should be clearly spelled out in the terms and conditions, one way to spot such an offer is to look out for conditions — for example, “no interest if paid in full within 12 months.”

Cash Advance APR

It may be possible to draw cash from a credit card at an ATM or using convenience checks. However, credit card cash advances are often subject to a different (usually higher) APR and may begin to accrue interest starting from the transaction date.

Balance Transfer APR

Some credit cards may offer a lower APR rate for balances transferred from higher APR cards, which can be helpful if you’re looking to pay off high-interest debt. The balance transfer APR will usually only apply on a promotional or temporary basis, as noted above.

Purchase APR

This is the standard APR that is applied to most regular purchases charged to a credit card. It applies on any balance that remains after the statement due date. This is why, even if you’re disputing a credit card charge, for instance, it’s smart to pay off as much of your balance as you can to avoid interest accruing.

Penalty APR

Just as it sounds, penalty APR is a penalty fee. It’s higher than the regular purchase APR and kicks in as a result of payments that are more than 60 days late. The terms associated with penalty APR are disclosed in the credit card agreement.

Recommended: 10 Advantages of Credit Cards

The Takeaway

While credit cards can be a useful tool for managing cash flow (and even earning rewards and perks), it’s important to understand the costs involved. This includes understanding how credit card interest works and how credit card APR applies to credit card balances. Credit card APRs can vary widely, and it can be important to know what rate applies when so you can use your cards responsibly.

FAQ

What does the APR not include?

Although the interest rate and when it’s applied may vary depending on the type of transaction, APR typically applies to any funds that are drawn from one’s credit card.

Do you pay credit card APR monthly?

Whether APR is charged depends on the type of transaction and when it’s paid off. For regular purchases, there is no credit card APR at all so long as the balance is paid in full by the statement due date.

Is APR based on current balance?

Like other types of interest, APR is a percentage of the balance owed on a credit card. How APR is applied to various types of purchases and when interest begins to accrue typically depends on the type of transaction and is detailed in the credit card agreement. Most regular balances only begin to accrue interest if any amount is remaining after the statement due date.

What happens if you pay more than the minimum balance on your credit card each month?

Purchase APR typically is applied to any balance remaining after the statement due date. By paying more than the minimum balance, an individual will reduce the amount of funds that are subject to interest.

Photo credit: iStock/Eva-Katalin

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Mar

2024

What Is a Credit Card Chargeback and How Does It Work?

By Jason Steele | Credit, Financial Independence | Comments Off

If you’ve purchased a product or service using a credit card and never received it, or if the item arrived damaged, then you may be eligible for what’s known as a chargeback. A credit card chargeback is when a bank reverses an electronic payment to trigger a dispute resolution process.

In this guide, you’ll learn more about what a credit card chargeback is, how it works, and when you may be able to request one.

What Is a Credit Chargeback?

Credit card chargebacks usually occur between a merchant and a bank that issued the credit card used for the transaction. Chargebacks are used to reverse a payment after a billing error, unauthorized credit card use, or the failure to deliver a product or service. You can also request a chargeback when the goods or services that you paid for with your credit card you received aren’t delivered as advertised.

For example, if you ordered a red jacket, and you received a blue one, you could request a chargeback if the merchant refuses to exchange or refund your purchase.

Chargebacks can be initiated for almost any merchant that accepts credit card payments.

Credit Card Chargeback vs Refund

While both a chargeback and a refund can result in you getting your money back, they aren’t the same thing. Knowing the difference is an important part of understanding how credit cards work.

• With a refund, it’s the merchant rather than the consumer that initiates the return of funds. Additionally, a consumer typically deals with the merchant to get a refund

• When a chargeback occurs, it’s the bank issuing the credit card that you’ll work with.

How Does a Credit Charge Back Work?

If you have an issue with a product or service you received or you notice a charge on your credit card statement that you don’t believe was authorized, you can initiate a credit card chargeback. These are some details about how this typically works:

• You can usually only make a chargeback within 120 days of the date of purchase.

• Once you’ve contacted the credit card issuer to dispute the charge, the bank will take over the process and contact the merchant. The merchant will have the opportunity to either accept or refute the chargeback, and you may be asked to provide evidence supporting your request.

• At the end of the investigation, the chargeback will either be accepted, in which case you’d get your funds back, or it will be rejected.

• If you disagree with the decision, you can always continue to dispute the charge through a process called arbitration.

When to Use a Chargeback

The Federal Trade Commission (FTC) provides protections to consumers who use credit cards, including the right to accurate billing, protection from unauthorized charges, and the right to dispute credit card charges for goods or services that are different than described. As such, chargebacks are issued for a variety of reasons.

Before proceeding, however, keep in mind that if there was an issue with your service or goods, you may consider giving the merchant the opportunity to make it right before requesting a chargeback.

Fraud or Unauthorized Use

A common reason to request a credit card chargeback is due to fraud or unauthorized use. If you don’t recognize a transaction on your credit card statement or believe someone used your card without your authorization, you may consider requesting a credit card chargeback.

Moving forward, a good way to prevent credit card fraud can be to keep your credit card expiration date and CVV number on a credit card safe.

Incorrect Amount

If an amount on your credit card bill is incorrect, you can file for a chargeback. For example, if the merchant adds an extra zero to your bill and you can’t reach the company to have it corrected, then this would be a good time to request a chargeback — especially if the overcharge has pushed you close to your credit limit.

Recurring Billing Was Not Stopped

If you cancel a subscription service but continue to be billed afterwards, a chargeback can make sense. It can help if you have proof in hand that you had canceled the subscription already.

Goods and Services Not Delivered

Paying for a good or service that you never received is another reason to file a chargeback. If you order something that never arrives and are unable to get the company to send it or give you a refund, then filing a chargeback may be your best course of action. After all, you don’t want to potentially pay interest on something you never received, even if you do have a good APR for a credit card.

Goods or Services Were Not as Described

If you receive a good or service that was substantially different from what was described or agreed to, you can file a chargeback for the cost of that good or service. For example, if you paid to have work done on your house, but it was done incorrectly and the service provider refused to fix it, then you could request a chargeback.

However, remember that the merchant will get the opportunity to prove that the services were provided as described.

Return Credit Not Processed

If you returned an item or canceled a service within a merchant’s return policy but never received credit for the return, such as a refund, you can file a chargeback with your credit card. This can help you recoup the funds you were owed (plus any credit card interest that may have accrued in the meantime).

Recommended: How Many Credit Cards Should You Have?

How to Submit a Chargeback

Here are the typical steps for submitting a credit card chargeback:

1. Contact Your Bank or Card Issuer

To submit a chargeback, you first initiate the process with your bank or card issuer, often through its website. Some card issuer websites allow you to initiate or process most disputes entirely online. Otherwise, you can call your card issuer to file the chargeback or request a chargeback by mail.

2. Receive Confirmation of Your Request

After you’ve submitted the chargeback request, your bank will provide written confirmation of your chargeback request. They will then either post a temporary credit to your account to cover the disputed amount or pause required payments and APR on a credit card on the disputed amount while the issue is being investigated.

3. Wait While Your Request Is Submitted to the Merchant

Next, the bank will submit your chargeback request to the merchant. The merchant has a certain amount of time to respond to the bank’s inquiry.

During the investigation, make sure that you continue to pay your credit card bill for the remaining charges. At the least, make sure that you’re making the credit card minimum payment. Otherwise, you’ll end up paying interest on the non-disputed charges.

4. Receive a Decision

If the chargeback is accepted by the merchant, your billing dispute will be closed and your bank will provide an account credit to cover the disputed charge.

However, if the merchant rejects the chargeback request, your bank will evaluate the information and make a decision, which they will notify you about in writing. If you disagree with the bank’s decision, you can dispute your bank’s decision through the bank’s dispute resolution process.

The Takeaway

Credit card chargebacks allow you to dispute a charge on your credit card. You can initiate a chargeback from a variety of reasons, such as fraud or unauthorized use, being billed for an incorrect amount, or encountering a situation where goods or services either aren’t delivered or aren’t provided as described. To start the process, you’ll contact your credit card issuer, and they will then reach out to the merchant.

FAQ

What happens when you submit a chargeback?

When you submit a chargeback, you initiate the process with your bank. The bank contacts the merchant for the request, and the merchant decides whether to accept or reject the chargeback request.

Does a chargeback hurt your credit?

A chargeback doesn’t hurt your credit in itself, but any unpaid credit card bill during the dispute process could temporarily impact your credit score. If the disputed charge or charges are large and comprise a significant portion of your credit limit, this could also negatively affect your credit score temporarily, since your credit utilization ratio will be high.

Are chargebacks always successful?

Chargeback requests are not always successful. The merchant can respond that the charge is valid and provide documentation to support the claim. In this case, the credit card issuer may deny your request for a credit card chargeback.

How much is the chargeback fee?

A chargeback fee only applies to the merchant, not to the customer. The average chargeback fee is less than 1% (0.60%, to be exact), but businesses with more chargebacks will face higher fees.

Is it worth fighting a chargeback?

Whether it’s worth fighting a chargeback depends on a variety of factors and will vary from person to person. Consider the amount in question, the time it may take, and the reason for the chargeback request. It’s also a good idea to contact the merchant first to give them a chance to correct the problem before requesting a chargeback.

Photo credit: iStock/PamelaJoeMcFarlane

Mar

2024

What Is CVV Number on a Credit Card and How Do You Find It?

By Ashley Kilroy | Credit | Comments Off

A CVV number is a three- or four-digit number on the front or back of a credit card that helps prevent fraud. Given that credit cards are a form of payment frequently targeted by fraudsters, it’s crucial to understand how to protect them. One way that credit card companies attempt to secure your personal information is with the CVV number.

Here, you’ll learn more about what a CVV number is on a credit card, where to find it, and how to protect it.

What Is the CVV Number on a Credit Card?

A card verification value, also known as the CVV, is a three to four-code printed on your credit card, and it’s a crucial part of understanding how credit cards work. The CVV (sometimes referred to as a CID) on credit cards adds an extra layer of protection when you’re making a purchase online or over the phone since it’s harder to prove your identity when you’re not making a purchase in person.

While not every online merchant that accepts credit card payments may require the CVV in addition to your credit card number and expiration date, asking for this number helps the merchant to verify that you have the card in hand and that it’s not stolen. In other words, CVVs on credit cards are used to protect you against fraud.

CVV vs PIN: What’s the Difference?

Here’s how these two short series of numbers differ:

• PINs are personal identification numbers that you create when you open an account. Usually, PINs are four digits, though some may have more digits. If you need to withdraw money from your debit card or take a cash advance from your credit card, for example, that’s when you will use your PIN.

• A CVV is a number provided by your bank or credit card issuer on your physical credit card. You may be asked to provide the CVV number when completing a purchase over the phone or online as an added layer of security.

While some banks or card issuers may give you a PIN to use initially, you’ll typically have to change it within a certain amount of time. (You don’t have the same luxury with the CVV, since the financial institution generates the number for each card.

How to Find the CVV on Credit Cards

Different credit card issuers print the CVV in different locations.

• Mastercard, Visa, and Discover credit cards place a three-digit CVV to the right of the signature box on the back of your card.

• American Express places a four-digit CVV on the front of the card above your account number. American Express refers to the CVV as the card identification number, or CID.

The Purpose of CVV Numbers

In 2023, the Federal Trade Commission received more than 2.2 million fraud reports, totaling $10 billion in losses, with online shopping being the second most commonly reported type of fraud.

To help combat fraud, many merchants require a CVV to complete a transaction.

• While merchants can store your card information, they are not allowed to store your CVV. Therefore, if hackers were to break into a merchant’s system, they wouldn’t get ahold of your CVV.

• If someone were to attempt to use your card fraudulently, they would have to provide a CVV if the merchant requires it in order to complete the purchase.

Thus, when making a purchase online or over the phone, the CVV on credit cards can act as a way to verify that you have the card in hand and aren’t making a fraudulent purchase.

However, it’s important to note that not all businesses are required to request the CVV number. In those cases, a thief may still be able to make a purchase using just your credit card number. If that were to happen though, there are steps you can take to get your money back, such as a credit card chargeback.

How Your CVV Protects You From Identity Theft

CVV numbers are designed to protect your card from identity theft. While a fraudster may be able to gain access to your other credit card information in a hack or through credit card skimming, merchants cannot keep your CVV or CID on file after a purchase is authorized.

So, in other words, if a fraudster hacks a merchant’s database, they might be able to pull your account number and credit card expiration date, but the CVV or CID is a lot more challenging to access.

Is CVV a Fail Safe?

CVVs and CIDs are not fail-safe. As of now, merchants are not required to request the CVV or CID. So, unfortunately, if a fraudster has your card number, it’s possible they can use it at retailers that don’t require the CVV or CID number.

Some retailers may require a CVV or CID once if you frequently make purchases through their online shop. Other merchants may not require your CVV beyond your initial purchase.

A couple of scenarios to consider when thinking about security:

• If a cybercriminal gains access to your account at that store, they may have free range of your credit card, potentially spending up to your credit card limit.

• Cybercriminals can use software like malware to run off with your CVV or CID through various merchants.

• They may also use phishing techniques to steal your CVV number directly from you. For instance, they might send you an email that may appear official at first glance requesting this information.

• Additionally, if someone steals your physical card, they will have access to all its information.

Fortunately, however, some credit card issuers are toying with the idea of using dynamic CVVs that change frequently. Using a dynamic CVV would make it even harder to use your credit card for fraudulent shopping sprees.

In the meantime, it’s worth taking a look at a credit card issuer’s security measures when applying for a credit card.

How Can I Protect My CVV?

No one wants their credit card information stolen. So, to protect your personal information from getting hacked, there are a few things you can do to protect your CVV. Whether you’ve just become old enough to get a credit card or you’re a longtime cardholder, these tips are important to keep in mind.

• Protect your home WiFi with a password. Without a password, you leave your WiFi open to anyone who wants to join. Cybercriminals can use your WiFi to access some of your personal information, including your CVV.

• Monitor your account activity frequently. If you keep close tabs on your purchases, you can quickly identify when something seems out of sorts. Every time you receive a statement, take the time to carefully review it before just going ahead and making the credit card minimum payment. If something is off, contact your bank or card issuer immediately.

• Install antivirus software. This type of software can scan your computer for any fraudsters’ tools that could steal your personal information.

• Avoid unsolicited or phishing requests for your personal information. Don’t quickly hand out your personal information if someone contacts you over the phone or via email requesting your personal information. For example, a scammer may send you an email requesting you verify your credit card information to keep your account open. Contact your card issuer or bank directly instead of sending information over email if you need to verify any information.

• Steer clear of unsecured websites. If a website doesn’t have “https:” in the address, it’s best not to use your credit card information on the site. Also, check all websites for the SSL padlock. If the website doesn’t have it, you’ll likely want to avoid using your information on the site.

• Skip saving your credit card information when shopping online. Many websites offer you the option to save your credit card information to expedite checkout next time you make a purchase with the retailer. While it may seem convenient for you, it also makes unauthorized purchasing more convenient for potential thieves.

• Avoid sharing photos of your credit card with loved ones. Sending photos of your credit card or posting them on social media gives people access to the information on your card.

• Consider a VPN when using your computer outside of your home. Using a VPN while traveling and using public WiFi can help to keep your personal information secure.

The Takeaway

The CVV helps protect your credit card from fraud and theft. But, while your CVV adds an extra layer of security, it’s up to you to protect your personal information the best you can. For example, avoid giving your personal information out to just anyone or saving your credit card information when shopping online. That’s part of using your credit card carefully and responsibly.

FAQ

Is it safe to give out your CVV number?

It’s usually safe to give your CVV number to merchants you trust. However, you should guard your CVV and make sure you’re only giving it out when you’re in a secure environment.

Can you use a credit card without a CVV?

Yes, some merchants don’t require a CVV to process online or by phone purchases. However, some retailers may require the CVV to complete transactions.

Can I change my CVV number?

As of now, the only way to change your CVV is when you request a new credit card. When the bank or credit issuer sends you a new card, they will generate a new CVV to coincide with the card.

Is a CVV number confidential?

Technically, your CVV should be confidential. However, if it gets into the hands of the wrong people, they could have access to your credit card information, which they may use at their discretion.

Photo credit: iStock/Kateryna Onyshchuk

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