Laws Regarding Credit Cards
Federal regulations in the United States concerning fair credit aim to protect the consumer, while permitting creditors to collect what is owed to them. Consumers who receive a regular credit card statement may have noticed a new look in 2010, as well as additional information which is included on the invoice. The credit card industry underwent an overhaul in 2010 to meet new federal regulations on how creditors must deal with customers.
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Disputes
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The Fair Credit Billing Act (FCBA) regulates how credit companies must handle billing disputes with customers. The law limits the consumer's liability to $50 for unauthorized charges, and specifies that the consumer should immediately contact the creditor in writing to question particular charges. In addition, the law prohibits the credit card company from reporting the account to credit agencies as in default during the time of the dispute settlement.
Disclosure
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The laws concerning consumer credit rights that went into effect in February 2010 set new rules on what information a credit card company must disclose to a customer. For example, if the terms of the credit agreement are going to be changed by the company, the creditor must provide the customer with a detailed description of the expected changes 45 days in advance. The consumer then has an option to decline the changes by canceling the card and closing the account.
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Fees and Interest
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New laws that took effect in February 2010 also imposed limitations on what credit card companies can charge cardholders for annual fees and over-the-limit charges. The card issuers are also prohibited from raising the interest during the first year of a new account unless the rate is tied to a market index, offered as an introductory-only rate, or if the customer defaults by failing to pay on time. Federal laws also require the creditor to clearly detail, on the statement, the total amount of interest the customer will pay if only the minimum payment is paid each month, and the amount of time it will take to pay the balance fully by providing only the minimum monthly payment.
Stricter Controls
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Credit card regulations that went into effect in August 2010 expanded on the February laws by implementing stricter controls on the amount of fees the credit card company can charge. For example, the new law specifies that late payment fees cannot exceed the amount of the minimum payment due, nor can the creditor charge cardholders more than one late fee per incident. An additional provision that went into effect in August 2010 requires credit card issuers to send statements a minimum of 21 days prior to the due date.
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References
- Bankrate: 8 Major Benefits of New Credit Card Law
- Board of Governors of the Federal Reserve System: New Credit Card Rules Changes Effective February 22, 2010
- Board of Governors of the Federal Reserve System: New Credit Card Rules Changes Effective August 22, 2010
- Federal Trade Commission: Fair Credit Billing
Resources
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