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5 Little-known Facts About Credit Cards

Living a cash-only lifestyle is one of the best ways to avoid overspending and staying out of debt. But to do things such as purchasing airline tickets or renting a car, having at least one credit card is almost a necessity. Plus, using a credit card responsibly can help build a positive credit history. But how much do you really know about those little rectangles of plastic we keep in our wallets?

Here are five interesting or little known facts about credit cards you can bring up the next time there’s a lull  in the conversation (a few of them might even save you some money, too):

Charge plates came before credit cards                                                                                                        Save_Dining_Out2

Used until the early 1960s, charge plates were small, aluminum or white metal embossed plates about the size of dog tags. They had a paper or cardboard backing with the merchant’s name and customer’s signature. Rather than giving customers the charge plate, the stores kept them on file. The clerk would have to retrieve a customer’s charge plate from a file when they wanted to use it.

The first general-use credit cards were sent unsolicited…

to residents of Fresno, California by Bank of America in 1958. Made of paper, these ‘BankAmericards’ had a credit limit of $300. By late 1959, more than 2-million people throughout California had received one of these cards.  And not long after that, 20% of those accounts became delinquent, costing the bank nearly $9 million dollars.

The Federal Truth in Lending Act eventually made it illegal to send credit cards unsolicited, however, the practice of sending pre-approved applications for credit cards is still alive and well. You can opt out of receiving those here.

$50 is the maximum liability for unauthorized use

If your credit card is lost or stolen and used without your consent, you’re on the hook for $50 maximum. You can thank the Fair Credit Billing Act for this rule, which also says that once you report a card as lost or stolen, you’re not responsible for any transactions that occur following the report. So it’s really important to let the card issuer know immediately if you lose track of your card for any reason.

You can’t use your credit card overseas…

Unless you request a version that has a microchip, rather than a magnetic strip. European credit cards use chip-and-pin technology for added security, which makes our magnetic strip cards incompatible with their card readers. Chase, Citi and US Bank are among the card issuers who offer cards with a chip. Just be sure to request your new card well in advance of your trip to be sure you receive it in time.

Your card might be declined if…

You’re getting dangerously close to your spending limit. Gas pumps automatically authorize a $50 sale (even if your actual transaction amount is lower), so if you have less than that available to charge, your transaction will be denied. Restaurants will typically authorize an amount equal to the total  amount of the bill plus 25% gratuity. If you think your card might not be able to handle it, pay with cash to avoid the embarrassing “Excuse me, but your card was declined…” speech. (If you’re at or near your max on one or more cards, credit counseling can help you get your budget and spending back on track).

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