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Why Checking Your Credit Card Statement Is So Important

Posted on Jan 6, 2008 by Tom Fragala

It is simple and you know the answer: if you don't check your statement and fail to catch fraudulent charges or even errors the bank makes (within 60 days from mailing), they can tell you to jump in a lake. Yes, even if they make a stupid mistake, you will have to pay. I learned this lesson myself this year.

Fraudulent charges made their way onto my Citibank credit card account, which I disputed. However, there were some finance changes related to the fraud (long story) that were missed (because the card was used for business purposes and the charge descriptions were very confusing). There was even one charge where I was assessed a late payment fee, even though I had actually paid the bill on time! A clear error, covered under federal law. I had arguably missed the 60 day window (it's just not clear, although I don't think I did) and Citibank sent me a form letter blowing it off entirely--we ain't gonna pay pal. I am still disputing this 8 months and two letters later and I have little or no chance, regardless of whether I am right. Am I really going to sue Citibank over a couple hundred bucks? Imagine the time and cost involved in that.

The federal law governing credit cards and revolving charge accounts is the Fair Credit Billing Act. To review, the law only covers disputes about billing errors, nothing more. The FCBA says your liability for unauthorized charges is $50. It also protects you against charges with the wrong date, wrong amount (kind of a important, no?), goods or services you didn't receive but paid for, general math errors, and failure to send bills to your current address.

To take advantage of the law's protections, you MUST write to the creditor at the address given for billing inquiries and send the letter so it reaches the creditor within 60 days after the first bill containing errors was mailed to you. Read that again. You don't just have "60 days" from when you see the error, or even 60 days from when you receive your statement.

One last point about FCBA that is pretty important. What happens if someone opens a phony credit card account in your name, without your knowledge and you never receive the statements? Forget FCBA, it's really no help at all. It was written to help with errors on existing valid accounts.

Update: In case I didn't make this clear, you must dispute in writing to get protection under the law, which also means, to be safe, you must use certified mail, return receipt. Practically speaking, if you catch the errors on your credit card or charge account quickly and the amounts are not huge, you are probably safe disputing it by phone first. Then you can keep an eye on it to make sure the charges are wiped out and do not reappear. If the creditor does not comply, then you can dispute in writing, again within 60 days of the date your statement was mailed to you.

Oh, what happens if your statements are lost or stolen? Well, the simple answer is you are probably screwed. Now you have some idea just how important our postal system really is--and how when it fails, the repercussions are monstrous.