Vol.1, No.2

Consumer rights and credit cards

You have rights when you use your credit cards. Understand them and you'll be ready to charge at the shopping mall or online.

Credit cards
Photo Credit: Dustin Steller
Credit cards offer convenience, security, and protection against unethical sellers, but to keep you and your credit card account out of trouble you need to know your rights. Federal law protects you when you apply for and use credit cards. The Federal Trade Commission enforces these rights. Make yourself familiar with them and you'll be ready to charge.

You have the right to:

1. Have a fair review of your credit application.

2. Receive a credit card only if you've requested it.

3. Be informed of credit card terms.

4. Have payments credited promptly.

5. Receive refunds for credits on your account.

6. Dispute errors on your bill.

7. Be protected from unauthorized charges.

8. Dispute charges for unsatisfactory merchandise or services.

9. Be treated fairly by debt collection agencies.

Let's consider each of these in detail.

HAVE A FAIR REVIEW OF YOUR CREDIT APPLICATION

Credit card issuers may not deny credit on the base of race, sex, marital status, religion, age, national origin, or receipt of public assistance. Public assistance income must be considered as equivalent to other income. If you are denied a credit card, you must be told why.

RECEIVE A CREDIT CARD ONLY IF YOU'VE REQUESTED IT

A credit card issuer may not send you a credit card for a new account unless you have requested it by phone or in writing. However, a credit card company may send you a renewal or replacement card for an existing account and may send you solicitations and applications without your request.

BE INFORMED OF CREDIT CARD TERMS

You must be informed of the terms of your credit card before the account is opened. Make yourself familiar with how they determine finance and other charges. You will want to know the annual percentage rate (APR), which is the annualized interest rate you pay for the credit you use, and the periodic rate, which is the interest rate applied to your outstanding balance during each period to compute finance charges. The balance itself may be computed in a number of different ways. The most common is the average daily balance method, but other methods may be used. If you expect to carry a balance, pay close attention to the balance computation method: it can make a big difference in your total finance charges each month.

You have the right to know what other fees might apply besides finance charges. Most cards include an annual fee and some charge additional fees for cash advances, late fees, or credit limit overage fees. If you plan to pay your balance off in full each month, make sure your card provides a free period or grace period during which finance charges do not accrue. If your card does allow such a period, you must be mailed your bill at least 14 days before the due date so you have time to pay without incurring finance charges.

HAVE PAYMENTS CREDITED PROMPTLY

Credit card companies must credit payments to your account on the day that they are received, unless it would make no difference in what you owe.

RECEIVE REFUNDS FOR CREDITS ON YOUR ACCOUNT

If you have a credit on your account, as when you've returned merchandise or paid more than the full balance, you may request a refund in writing if the amount of the credit is more than one dollar.

DISPUTE ERRORS ON YOUR BILL

If you find an error on your bill, you should notify the credit card issuer as soon as possible in writing, no later than 60 days after the bill was first mailed. You do not have to pay the disputed charge while the problem is being investigated. The credit card company must acknowledge your dispute in writing within 30 days of receiving it. The dispute must be resolved within two billing cycles and not more than 90 days after you notified the company.

BE PROTECTED FROM UNAUTHORIZED CHARGES

If your card is lost or stolen and you report the loss or theft to the credit card issuer before someone else uses the card, you are not liable for any unauthorized charges. If unauthorized charges are made before you report a loss or theft, you are liable only up to $50. If you find an unauthorized charge on your card and the card is still in your possession, you should follow the steps described above for disputing a charge.

DISPUTE CHARGES FOR UNSATISFACTORY MERCHANDISE OR SERVICES

In certain situations you can dispute charges for goods or services that you found unsatisfactory. The charge must have been for more than $50 and you must have made the purchase in your home state or within 100 miles of the billing address on the card. Those restrictions do not apply if the seller is your credit card issuer or otherwise has a special business relationship with the credit card issuer. In any case, you must first try to solve the problem with the seller.

BE TREATED FAIRLY BY DEBT COLLECTION AGENCIES

If you fall behind in paying your credit card bills, the credit card company may turn your account over to a debt collection agency to recover the amount due. Collection agencies may not contact you before 8 a.m. or after 9 p.m. and they must identify themselves when they do call you. They may not contact you at work if they are made aware that your employer disapproves. They may not harass you or lie to you. If you ask them in writing to stop contacting you, they must stop.

KNOW YOUR RIGHTS

Credit cards can be convenient. They offer you protection against sellers who don't fulfill your expectations. They help you establish credit and make it easy to buy online. However, credit cards are not without hazards. Know your rights and you'll be able to manage your credit cards for maximum benefit.