Consumer group: Credit cards still best payment method
Nobody could accuse this blog of being overly sycophantic when it comes to credit card companies. Their every fault is examined in excruciating detail, while their–admittedly few–triumphs are often glossed over. No apologies for that; they’re generally a pretty unlovable bunch.
However, there is a danger in throwing so many brickbats and passing out so few bouquets. Namely: it’s easy to forget just how powerful credit card use can make you, and how consumer-friendly credit cards are.
Credit card use and emerging technologies
On Aug. 2, Consumers Union issued a press release that was a sharp reminder of just how much better credit cards are than other methods of payment. The release contained details of a new Consumer Reports study into emerging payment methods, such as charging purchases to your cellphone, or to soon-to-be-launched digital wallets. At the end of May, IndexCreditCards.com looked at Google’s version of these wallets in Credit cards minus plastic equals Google Wallet? Maybe.
Jeff Blyskal, a senior editor with Consumer Reports, made an important point: “As these new forms of payment grow more popular, consumers must be careful to understand the costs, and disparities in protections associated with the promise of new convenience.”
You see, you have to link these electronic payment media to some form of traditional account, usually plastic in the form of a credit card, debit card or prepaid card. And the consumer protections to which you’re entitled when you flash your smartphone or use your virtual wallet are likely to match those provided by the account to which it’s linked. Or, as the Consumer Reports press release puts it:
A consumer’s right to get their money back when something goes wrong–errors, goods not delivered as promised, fraud–varies by the payment option used. Again, the underlying method of payment tied to your mobile device will govern their rights in such instances.
Credit card offers the best protections
But the next sentence in that paragraph is the most interesting: “Cell phone and digital wallet payment services linked to a credit card offer consumers the most protection.”
Why should that be? Simple. Because a credit card offers the most protection whether or not you’re paying using an exotic new device. Now, it’s true that some banks are generous enough to provide consumer protections that actually or nearly match those of credit cards. But generous is precisely what they’re being, because there’s no law that says they have to.
And even if those protections are included in a contract, the chances are they could be withdrawn virtually overnight. Credit card companies, on the other hand, are forced to provide protections by acts of Congress. They have no choice, and are unable to wriggle out of properly compensating their customers when transactions go wrong.
So there’s still no opportunity to present a bouquet to credit card companies, because they’re motivated to help you by federal law rather than altruism. Still, you have to love their credit cards.
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