We all know that credit cards can provide us with more protection than many other payments, but do you know all of the laws in place that can protect your consumer rights? Understanding these could help to protect you if something goes wrong with a payment, or if you’ve got a dispute with a seller.
There are a number of laws in place that current and prospective credit card holders should familiarize themselves with. Some credit cards offer rewards while some may not, but they’ll all be covered by federal laws. Below, we’ve detailed some of the key laws that protect you when using your credit card for payments.
The Credit CARD Act
This is one of the more recent consumer credit laws (the Credit Card Accountability, Responsibility and Disclosure Act), and it offers a number of benefits. It stops credit card companies from increasing interest rates, so long as you pay according to the original agreement and on time. Should there be any credit card rate increases, it gives you the right to pay off your existing debt under the original terms, and you can opt out of these increased rates. You should also be notified of these increases 45 days before they come into play.
Double-cycle billing is also banned, which is where credit card issuers don’t just apply interest to the most recent balance but to two full cycles of your card balance. In essence, the grace period you get for paying off your previous month’s balance is eradicated, so even if you paid off your entire bill in one month, the following month could see interest charges being applied to your account still!
Fair Debt Collection Practices Act
For borrowers who start to feel distressed, this act can provide a great amount of relief. Third-party collection abuses are covered in this act, which prevents collectors from carrying out a number of actions. These include, misrepresentation of who they are or the purpose of their call; making false threats (e.g. if they say they’re going to sue you, they need to follow through with this action); discussing your personal debt with anyone else without your permission, except your spouse; calling on multiple occasions throughout the day, before 8AM or after 9PM, or during work hours if it is interrupting your work.
Fair Credit Reporting Act
The Fair Credit Reporting Act helps to make sure all of your details are correct as lenders and banks will have to submit information to credit bureaus. Therefore, this provides you with the right to look at your credit file so you can see if the information is correct and why you’ve been turned down for credit; you are also entitled to an annual report, free of charge, from each credit bureau.
Should you find that there are any inaccuracies in your details, you can dispute these with the bureau and this has to be looked into within 30 days. Any false information will then be removed. If you do have negative information on your credit report that is correct, these too must be removed after a certain period of time. After 7 years, late payments and defaults should be removed, while chapter 7 bankruptcies will remain on there for 10 years.
What’s more, these reports can only be accessed by those who are stipulated, by law, to have a right to look at these files. These include prospective employers, landlords, insurers or creditors.
Fair Credit Billing Act
Protecting you from inaccurate billing charges, this act will limit your financial liability to $50 for any unauthorized charges, which means you won’t have to pay for double or incorrect charges, services or goods that aren’t as described or weren’t accepted, or any goods that were ordered but weren’t received.
Truth in Lending Act
You’re protected from unfair lending practices before you’ve even accepted the terms of a loan or credit card. Before proceeding, the issuer of your credit card or loan must provide you with the interest rate, the terms and any other costs involved in writing and in plain language. Therefore, if you receive a promotional offer through the post that offers a great APR, this must be something that’s available to those who qualify for this rate – it can’t just be a bogus offer that lulls you into getting a loan or credit card with this company.
These are the main federal acts that are in place to protect your consumer rights when using or signing up to a credit card company. However, you may find that additional laws and regulations are in place in your own state, so it’s always worth looking into these too!
Harriet Haynes has a finance background. Now enjoying a career break to raise her first child, she often writes about personal finance topics which get published online.
{ 0 comments… add one now }