Credit Protection Laws
There are many Federal laws in place to protect your rights when you interact with your credit card company. Here are some of these important laws and protections you should know:
- The Credit CARD Act (2009) provides many consumer credit protections. For example, your credit card company generally cannot increase the rate on your existing balance and must tell you forty-five days before increasing the rate for new transactions. The Act also places new limits on fees and rate increases and requires consistency in payment dates and times. See Truth in Lending Act.To learn more about your rights under the CARD Act, read the summaries of the Federal Reserve Board’s new credit card rules, “What You Need to Know: New Credit Card Rules Effective Feb. 22” and “What You Need to Know: New Credit Card Rules Effective Aug. 22.”
- The Consumer Credit Protection Act (1969) is an umbrella consumer protection law that includes the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, and the Truth in Lending Act.
- The Equal Credit Opportunity Act (1974) prohibits discrimination in credit transactions on the basis of certain personal characteristics, such as race, color, religion, national origin, sex, marital status, age, because you receive public assistance, or because you’ve exercised your rights under the Consumer Credit Protection Act.
- The Fair Credit Billing Act (1974) requires that a credit card company promptly credits your payments and corrects mistakes on your bill without damage to your credit score. It also lets you dispute billing errors on your credit card and withhold payment for damaged goods. See Truth in Lending Act.
- The Fair Credit and Charge Card Disclosure Act (1988) requires a lender offering you a credit card to tell you about certain terms on the card, such as the APR, the amount of any annual fee, and whether you have an interest-free period to pay your bill before any interest charges are added. See Truth in Lending Act.
- The Fair Credit Reporting Act (1970) protects you against inaccurate or misleading information in credit files maintained by credit reporting agencies. It requires that you must be told what’s in your credit file and have the ability to correct any errors.
- The Fair Debt Collection Practices Act (1977) details the rules a debt collector must follow when trying to collect a debt from you. It prohibits collectors from engaging in abusive debt-collection practices, such as calling you outside of the hours of 8:00 a.m. to 9:00 p.m. local time or communicating with you at work after they have been advised that this is unacceptable or prohibited by the employer.
- The Truth in Lending Act (1968) requires that lenders use uniform methods for computing the cost of credit and for disclosing credit terms so you can tell how much it will cost to borrow money. It also limits your liability to $50 if your credit card is lost, stolen, or used without your authorization, and it prohibits the unsolicited issuance of credit cards. The Fair Credit Billing Act and the Fair Credit and Charge Card Disclosures Act were later additions to the Truth in Lending Act, as are many provisions of the Credit CARD Act.