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How to Challenge & Win A Credit Card Dispute

Author: Michael Smith

It is fairly common to occasionally have an incorrect charge appear on your credit card bill. Whether your credit card information was stolen or a legitimate charge was made for the wrong amount, here are some strategies for disputing a charge with your credit card company.

The Fair Credit Billing Act mandates that you notify the creditor within 60 days of getting the statement, and the creditor must acknowledge receipt of the letter within 30 days. But you'll probably start with a telephone call to the credit card company, and you should be armed with your receipt or other evidence of the error. The company may refer you to the merchant in question, or may take the first steps itself. In either case, you'll begin by talking to customer service representatives.

1. Ask for a manager immediately.

Many customer service representatives cannot take action without their manager's approval, so skip explaining your case to a middleman and ask to speak directly to a manager. If you have already called once, don't waste any more time explaining than you have to.

Additionally, if you have been on hold for a while or if you have trouble reaching the manager who has helped you in the past, ask for a direct number so you can bypass the general customer service line next time.

2. Keep track of your conversations.

A common problem with customer service is that sometimes different representatives will tell you different things. Your case will automatically gain credibility and clout if you can say, I spoke with customer service representative Linda on September 15th, and she told me XYZ.

Make a spreadsheet with relevant information such as customer service representative names, employee ID numbers, the date of the conversation and notes from the conversation. Make sure you update it every time you call. If you hadn't started tracking your conversations at the beginning of the dispute, begin as soon as you start having trouble with the system – it will still help your case gain credibility and let you keep track of who has told you what.

Reviewing your notes with the customer service representative before you hang up the phone will also confirm that each of you understands what the other has said. If you quickly summarize the discussion to check for understanding and accuracy, you may save yourself frustration in the future.

Especially if the error was for a significant amount, follow up with a letter documenting the dispute and your discussion, sent to the creditor and copied to the credit-card issuer. Send the letter with a return receipt requested to document that it was delivered by the 60-day deadline.

3. You catch more flies with honey than vinegar.

Dealing with financial errors can be stressful, frustrating and time consuming. Remember that even if you have been dealing with this issue for months, the person helping you is probably new to your problem. Don't take out your frustration on the person who can help you – being patient and kind (but firm) even when a problem has been going on for too long will help you resolve the problem much more easily than if you vent your frustrations over the phone.

An effective approach is to appeal to the fact that they are the expert. Say, I can't be the first person to have had this problem before. You know this system better than I do. If you were me, how would you deal with this? This helps the employee move from a defensive mode into an empathetic problem solving mode.

4. Check that the disputed charge has temporarily been removed from your account.

Credit card companies will generally do this until the dispute has been resolved. If they conclude that the charge was fair, the amount will reappear. In the meantime, be sure you pay at least your minimum balance to avoid accruing late charges and interest.

5. Consider this only if nothing else works.

If your problem looks like it will not be resolved, you can tell a manager you want to close your credit card. Credit card companies spend a lot to recruit new customers (those credit card offers in the mail, at department stores and on airplanes? All part of expensive marketing campaigns). Because it costs money to find new customers, they don't want to lose any customers they already have.

An issuer will often become more accommodating if you are willing to close a card over a dispute. This threat is not without consequences for you, however: Closing a credit card may adversely affect your credit. While threatening to close your account may be enough to solve your problem, actually closing your account should be a last resort used only if you are willing to take a potential credit score hit. The reason: it will reduce your available credit and your credit utilization rate will go up. To understand more about the implications, read Should You Close Your Credit Card?

The Bottom Line

Credit cards companies want to retain their customers, and it is in their best interest to make sure that their customers are being treated fairly. Credit card disputes can be frustrating and stressful, but by being organized, persistent, patient and kind, most disputes can be won eventually. For background on what you're entitled to as a customer, read The History Of Consumer Credit Rights.

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