Know Your Credit Card Rights: Complete Guide

Credit Card Act

Despite all their benefits, credit cards have gotten a bad reputation. In the past, the problem was the credit card issuers. They used deceptive practices, applying obscure fees and harsh penalties for the slightest customer mistake. Today, card issuers are more transparent, yet consumers still worry about hackers and criminals. When they commit fraud on your account, the damage to your credit history can take years to repair.

How can you fight against these challenges? You have to learn as much as you can about your credit card rights. A good place to start is this guide. It reviews the five major laws that protect credit card customers. These laws cover consumers from the time you start looking for a credit card through the life of your account.

Truth In Lending Act Of 1968

This is a federal law designed to ensure consumers have informed used about credit. It requires lenders to provide clear disclosures about the conditions and costs. The Act seeks to protect future credit card customers through the following:

  • Credit card issuers must provide information in an easily comprehensible form. This includes all terms and conditions, fees, interest rates, calculations related to finance charges, and other lending procedures.
  • If the card issuer promotes a special offer, it must be real and available to customers who qualify.
  • Customers have a three day grace period to cancel a loan agreement without suffering a financial penalty.
  • Lenders are barred from using high-pressure sales tactics to get you to sign up. They also cannot use misleading procedures.
  • Credit card issuers must provide standard credit card agreement information in clear and simple language. This is intended to help you compare offers.

Fair Credit Billing Act Of 1975

This Act shields customers from paying erroneous expenses on their credit card bill. It limits your liability to $50 for items ordered but never received. This law also covers goods or services that you did not accept, and duplicated or wrong charges. Under the law:

  • Errors on your bill must be reported in writing within 60 days of the statement date. Your correspondence to the lender must include your name, account number, and specific information about the disputed charge.
  • If you receive an inquiry within 60 days, your lender must let you know.
  • The creditor cannot attempt to collect the charge during an ongoing investigation.
  • The lender must either remove the erroneous charge from your account or conduct an investigation into it. Results from the investigation and further action to be taken must be communicated in writing.
  • If it was a valid error, the lender has to correct it and credit you the contested amount. This must also include any additional financial charges.

Fair Credit Reporting Act  Of 1970

The FCRA verifies the information credit reporting agencies have about you is fair, correct and private. This is crucial since lenders use your credit report to determine your credit risk when you apply for credit. Lenders report your credit card behaviors to the bureaus in return. Since 2003, the FCRA has been amended to become the Fair and Accurate Credit Transaction Act. It provides the following protections:

  • Consumers have the right to challenge incorrect or incomplete information on their credit report. The credit bureau must examine your claim, and remove or fix wrong information within 30 days.
  • Any information being challenged will be flagged as disputed on your credit report.
  • If you are denied credit, ask your lender which bureau they used. You can get a free credit report from that specific bureau to review.
  • Credit reporting bureaus are not allowed to report outdated information. Harmful credit information will be removed from your report after a given amount of time.
  • Access to your credit is limited to specific users, like lenders, insurers, and employers.

Remember, you can get one free credit report annually from each of the three credit bureaus: Experian, TransUnion, and Equifax. You can also get a free report if you suffer identity theft, fraud, or are denied credit. Visit AnnualCreditReport.com for your free report; this is the only place to get the official version from the credit bureaus.

Credit Card Consumer Protections

Fair Debt Protection Practices Act

This law governs the actions of third-party bill collectors, specifically as it related to customers. As a result:

  • Bill collectors can only contact customers between 8 a.m. and 9 p.m. They cannot make multiple calls per day to the same person.
  • Collection companies cannot call you at work if you inform them that incoming personal calls are not allowed.
  • Your privacy must be respected. Bill collectors need permission to discuss your debt with anyone other than your spouse. Mail correspondence cannot have the reason for the contact on the outside of the envelope. Your personally identifiable information cannot be made public, and cannot be published to a debtor’s list.
  • You, your family and your household are protected against intimidation, threats, and harassment from bill collectors.
  • Collection agencies must be honest and disclose who they are and why they’re calling. They are not allowed to impersonate a lawyer or law enforcement.

Credit CARD Act Of 2009

Before 2009, the credit card industry was unregulated. Credit card companies used dishonest actions and ambiguous contracts, which usually triggered harsh penalties for customer mistakes. The Credit Card Accountability Responsibility and Disclosures Act (Credit CARD Act) of 2009 made sweeping changes to the industry. It dictates how lenders can apply and modify interest rates, eliminating billions of dollars in penalties and lowered late fees. For a more information, see the following article: Credit Card Act Of 2009: Know Your Consumer Rights.

Why Knowing Your Credit Card Rights Is Important

Knowing your credit card rights puts you in a powerful position. You will be able to recognize lenders’ fraudulent behaviors and understand what to do to correct the situation. If your credit report is incorrect, or bill collectors start calling, you will know how to handle these challenges too. Once you know what lending behavior is appropriate, you should use this information when applicable to your financial situation.