Things you need to know about your credit card

Despite the prominence of credit cards in Australia, there are still many aspects of their use which remain a mystery.

Are you liable for unauthorised transactions on your card?

Most banks have a policy which states that so long as the customer advises the bank immediately upon their noticing the unauthorised transaction, and has not done anything to contribute to the loss, they will not be held responsible. Conversely, if you did contribute to the loss, for example by losing your credit card and then failing to advise your bank and cancel the card, you may be held responsible for the stolen funds.

If you do lose your card or if it is stolen, you should immediately call your bank to cancel the card. Time is of the essence since every minute you wait could result in fraudulent charges. It is a good idea therefore to store the phone number of your bank in your mobile phone.

Are merchants allowed to set a minimum transaction fee to use a credit card?

The answer to this is yes. Within his/her own store a merchant is fully within their rights to set the condition that credit cards cannot be used under a certain transaction amount. The primary reason behind this is that credit card use costs the merchant money, and beyond a certain point it is not worthwhile. If every customer walking into a store bought small value items on credit, the cost to the merchant could really add up. In order to keep profit margins at an acceptable level, many stores do state that credit will only be accepted above a certain dollar limit.

Can you be charged extra to pay with your credit card?

Typically, VISA or Mastercard use attracts little to no extra charges. However, since it costs merchants more to use some card types, you may find that there is an extra fee if you choose to pay on AMEX or Diner’s for example. This is simply the way the merchant recoups their costs and they are completely within their rights, and justified, to do so.

If you pay on credit, are you eligible for extra warranty on your purchases?

This is a common feature on ‘gold’ credit cards and is usually applicable to items purchased that fall into certain categories. For example, if you purchased a new iPod and payed for it on your ‘gold’ credit card, you may receive additional warranty on that item from the card provider. However, this warranty is usually only for a short period of time. For example, three months from the date of purchase, and covers accidental loss or damage.

Is a merchant allowed to refuse your card if it’s not signed?

If a credit card is presented to a merchant and has not been signed on the back, not only is the merchant within their rights to refuse to accept the card as a payment method, they would also be well advised to do so since an unsigned card represents a heightened security risk. The signature on the back of a credit card is the primary means of identifying and validating whether you are the legitimate owner of the card. So you can imagine that without a signature, a merchant is within their rights to refuse acceptance of the card.

Do merchants have the right to ask for additional ID even if your card is signed?

If a merchant wishes to confirm your identity they have every right to request additional ID before the card is accepted as a method of payment. However, just because the merchant requests ID does not mean you are legally obliged to provide it. You are within your rights to choose not to show ID to a merchant if they request it, however be aware that this will likely result in the merchant not accepting your card.

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