Top Eight Things You Didn't Know About Your Credit Card

July 8, 2011
In a world of easy credit, it's so simple to swipe a card and amass a pile of belongings without ever thinking about the credit card itself.

8. The Number Has a Hidden Meaning

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These days access to credit is almost as difficult as finding pots of gold at the end of a rainbow. Your credit score or FICO score is the main way lenders determine whether you're worthy of receiving a loan to buy a house, a car, or start a business. The score also affects the amount of interest you pay on your credit cards. So whatever you do, you want this score to be as healthy as possible. So if you're thinking of getting rid of one of your credit cards, think twice.

Cancelling a credit card will actually have a detrimental impact on your credit. Finance blogger Money Girl explains, "You'd think that canceling a credit card would be one less account on your record, right? Well, the problem is that a card cancellation negatively affects three of the five credit factors." Your credit score is a rating of your credit history and if you remove that history, even if it's negative, it's going to affect your score. It's actually far better to have a credit card with nothing owing on it, than not to have the card at all. So keep the card, lock it in a draw and help your credit score climb.

4. You Are Not Required to Present ID to Complete a Transaction

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You're at the supermarket checkout and it comes time to pay. You kindly present your credit card and the snarky sales assistant snaps back, "ID." While most people begrudging present their driver's license, trying to repress the feelings of being treated like a criminal, it is not actually a requirement of credit card companies to have retailers confirm your identity. In fact in some states it's illegal for merchants to request your ID. All the major credit companies have this policy. Here's what VISA has to say:

"Although Visa rules do not preclude merchants from asking for cardholder ID, merchants cannot make an ID a condition of acceptance. Therefore, merchants cannot refuse to complete a purchase transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures. Laws in several states also make it illegal for merchants to write a cardholder's personal information, such as an address or phone number, on a sales receipt."

This is Mastercard's terms of agreement:

"A merchant must not refuse to complete a MasterCard card transaction solely because a cardholder who has complied with the conditions for presentment of a card at the POI refuses to provide additional identification information, except as specifically permitted or required by the Standards ."

So if you don't want to show your ID, don't. If the merchant refuses to accept your card, you can complain directly to the credit card company knowing you are in the right.

3. The Expiration Date is a Fallacy

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Your credit card number is much more than just gateway to a big television, fancy vacations and gas for your vehicle. It's also an algorithm than proves whether the card is real or not. The last digit of the card is known as the "checksum" and is used to validate the card using the Luhn algorithm. The math trick is relatively straight forward and is simple enough to calculate in your head. Here's how it works.

  1. Take the number of any credit card.
  2. Double every second digit starting from the right.
  3. Add these new digits to the remaining, un-doubled digits.
  4. The result should be divisible by 10. If it's not, it's a fraudulent credit card.

Nifty, right?