Credit Card offers come in all shapes and sizes. Some, like secured credit cards, are designed to ease first time account holders into low risk terms. Others, like travel rewards cards, are designed to benefit borrowers with a strong credit score and excellent repayment history. And of course, there are countless special offers, branded credit cards, and unique benefits that you might want to take advantage of.
So what do all of these different offers have in common? They are all beholden to certain rules. You, as a consumer, have specific rights and it is incumbent upon your credit card company to respect those rights.
But of course, you bear some responsibility here as well. It’s important that you understand exactly what those rights are so you can be sure these rights are indeed being respected. And this is important because knowing these rights could save you a fortune in interest rates, maximize your rewards, and protect you from bad actors, shady credit card companies, and unscrupulous debt collectors. Be sure that you understand all the laws designed to protect consumers and that you know how to leverage these laws to your own benefit.
That said, we recognize that the number of laws and regulations aimed at lenders, and positioned to protect consumers is quite large. Moreover, the contents of those laws and regulations are quite voluminous. In other words, as a consumer, you probably don’t have the time or desire to pore over the fine print of each regulatory act for a fuller understanding of your rights.
Indeed, over the course of the last 50 years, regulators and legislators have passed countless rules aimed at creating far reaching protections for consumers and credit card users. Among them are critical rules such as the Truth in Lending Act (TILA) and the Consumer Credit Protection Act, both from 1968, the Fair Credit Reporting Act (FCRA) from 1970, the Fair Credit Billing Act (FCBA) from 1974, the Fair Debt Collections Practices Act (FDCPA) from 1977, the Credit Card Accountability Responsibility and Disclosure (or Credit CARD Act) from 2009, and various aspects of the broader Dodd–Frank Wall Street Reform and Consumer Protection Act, which was passed in the wake of the financial crisis in 2010.
And of course, that’s really just the tip of the iceberg. There are rules designed to protect you from identity theft, to protect you from exploitation by credit lenders, and to provide you with recourse even in disputes with credit reporting agencies. But how do these rules translate into consumer rights? And how can you be sure you’re receiving all the protection you deserve?
Well, one of the best things you can do to protect yourself is to get started with the very best credit card offer. We suggest getting the ball rolling with some comparison shopping.
Or you can read on for a look at some of the essential rights that you have as a credit card consumer.
10 Consumer Rights That Every Credit Card User Should Know About
From protections against discrimination and aggressive debt collection tactics to the right to make billing inquiries or dispute charges before they reach the credit bureaus, learn more about your consumer rights and make sure you’re actually receiving all of the protections to which you are entitled..
1. Your Age Can’t Be Used Against You…For the Most Part
According to an article from the Consumer Financial Protection Bureau, the Equal Credit Opportunity Act ensures that your age cannot be made a factor for credit card companies considering your application. However, this condition comes with one pretty big caveat.
The Consumer Financial Protection Bureau points out that “According to the Truth in Lending Act, credit card companies generally can’t issue credit cards to anyone under 21 years old, unless they can show an independent ability to meet payment obligations or someone over 21 years old co-signs the account, agreeing to be held financially responsible if you’re unable to make your payments.”
This isn’t intended as a form of age discrimination but is in fact meant to protect young borrowers from exploitative practices. Indeed, for years, shady credit card companies have haunted college campuses with dubious offers and predatory lending practices. Adults of a certain age will remember well a time when credit card issuers propped up tables on highly trafficked university grounds, offering free t-shirts or keychains for the price of a signature. Often, these young borrowers received credit cards with exceedingly high interest rates. And with little understanding of the risks associated with credit card use, many would consequently find themselves deep in credit card debt.
For this reason, regulators have worked to curtail these abuses. One of the effects of this effort is this measure, which ensures that younger borrowers can’t be exploited by high interest rates, hidden fees, and other onerous lending terms.
Outside of this condition, a credit card company may not refuse your application because of your age nor may a credit card company base your interest rate or fee structure on your age. Credit card companies are legally required to base lending decisions entirely on your credit scores, payment history, and other indicators of your fitness as a borrower.
2. You Are Entitled to Protection Against All Forms of Discrimination
As noted, your eligibility for a credit card offer must be based entirely on your financial fitness, as must the terms of your lending agreement. This means that a credit card company may under no circumstances deny credit to applicants based on demographic factors. The same is true of the interest rates, fees and rewards for which you are eligible.
The Equal Credit Opportunity Act dictates that, for instance, “Credit card companies can’t deny you credit or offer you less favorable terms because of your sex or marital status.”
Likewise, you can not be denied credit or given unfavorable borrowing terms due to race, color, religion or national origin. If your credit profile, earnings and assets match the existing requirements for borrowing from a given lender, you are legally entitled to credit card application approval.
3. Credit Card Companies Must Allocate Money Fairly When You Pay More Than The Monthly Minimum
One of the most important pieces of advice you’ll receive when you’re just getting started with credit cards is to always pay above the minimum amount due on your monthly bill. In reality, you should do your best to carry a zero balance at all times. Only by paying off your bill in its entirety every month can you fully avoid interest charges.
But full repayment may not always be a possibility. If you must pay in increments, there is a good reason to pay whatever amount you can beyond that minimum required payment. When you do, it confers certain allocation rights upon you.
According to an article from Bankrate, “If you make more than your minimum payment due, creditors must apply the excess payment to the balance with the highest interest rate. If you make only your minimum payment, the lender can apply it to lower-rate balances.
In other words, paying off more than the minimum doesn’t just help you avoid higher interest repayment sums. It also requires your lender to give you the absolute best repayment terms on every dollar spent over that minimum. Do your best to take advantage of that requirement. You will consequently chip away faster at balances carrying higher interest rates, which will naturally reduce the amount of money that comes out of your pocket in the long run.
5. You Have the Right to Dispute Charges
Your credit card company is required to allow disputes on charges that you don’t believe are valid. You are legally entitled to review your credit card statements and identify any erroneous charges, any fees that you don’t believe are legitimate, and any suspicious looking transactions. It is both your right and responsibility to bring any flagged items in your statement to the attention of your financial institution.
In order to facilitate this right, credit card companies must provide consumers with ample information and a sufficient time period within which to identify and address billing errors.
This protection has been codified for half a century, and traces back to the 1974 amendment to the Truth in Lending Act called the Fair Credit Billing Act. According to an article from Bankrate, “this amendment allows consumers to dispute credit card errors. It also requires lenders to provide credit card statements at least 21 days before payments are due to give you the opportunity to review your credit card statement and dispute any errors.”
This is at least one reason why it is absolutely critical to review your monthly credit card statements. Everybody makes mistakes–even large financial institutions. You have a right to double check their work, and call out any mistakes you spot along the way.
6. You Are Entitled to Advanced Notice When Your Credit Card Company Changes Terms
Your credit card company is not allowed to jack up your interest rates, impose new fees, or otherwise alter the fundamental terms of your agreement without first providing sufficient advance notice. According to an article from the Consumer Financial Protection Bureau, a credit card company is required to provide consumers with a minimum 45 day advance notice before implementing any such changes.
This doesn’t refer to all changes but does concern those which can directly impact your lending and repayment terms. For instance, says the Protection Bureau, “Significant changes generally include increases in certain interest rates and fees, increases to the minimum amount due, or changes to the grace period or the way interest is calculated. You might not receive notice 45 days in advance about changes to the benefits you get from your credit card, such as points or cash rewards, or changes in the brand (for example, changing from Visa to MasterCard or vice versa) because these changes are generally not considered to be significant.”
You have a right to object to any of the changes implemented by your credit card company by opting out of your initial credit card agreement. Of course, you are still responsible for any outstanding debt. However, when you do opt out and close your account, your credit card company is obligated to honor the terms of your initial agreement–including that initial interest rate and fee structure–as you repay the sum of your debt for a period of up to five years.
In addition to the requirement to provide consumers with sufficient notice before changing interest rates or raising fees, credit card companies are usually also restricted from raising the interest rate on already outstanding debts. If you have accumulated debt at a specific APR, it will remain at that APR even as the interest rate goes up on future purchases and transactions. If you notice a hike in the APR on already outstanding debt, contact your credit card company right away to indicate that this is not permissible.
There is typically one exception to this rule. If you are the beneficiary of a limited time 0% APR promotion, your lender does not need to provide you with advanced notice that your promotional period is ending. You will have already been provided with this information at the beginning of your promotional repayment period. In most cases, this period will last for between three and six months. These offers are more commonly provided as either introductory bonus offers for new accounts or in combination with large retail purchases.
Especially when it comes to the latter, it is up to you to know exactly when this period is coming to an end, as this will mark a sudden and often high surge in your interest rate. Your goal should be to reach a zero debt balance before this promotional period expires so that you don’t pay anything in interest at all.
7. You Have the Right to Privacy from Third Party Marketing
You do have some privacy rights as the customer of a credit card company, though they are perhaps not as extensive as you might assume. Most protections dictate that your credit card company can’t share information about you or your account with nonaffiliated third parties. But that doesn’t exactly mean your credit card information won’t be leveraged fro marketing opportunities.
According to an article from the FDIC, “The privacy rule prohibits a bank from disclosing an account number or access code for credit card, deposit, or transaction accounts to any nonaffiliated third party for use in marketing. The rule contains two narrow exceptions to this general prohibition. A bank may share account numbers in conjunction with marketing its own products as long as the service provider is not authorized to directly initiate charges to the accounts. A bank may also disclose account numbers to a participant in a private label or affinity credit card program when the participants are identified to the customer.”
Your lenders are also required to provide you with regular and comprehensive privacy notices–both upon initial activation of your account and on an annual basis. It’s usually a printed correspondence with lots of small type print and dense legalese that the vast majority of account holders immediately discard.
But if you do read all of that fine print, you’ll likely come upon instructions for how you can opt out of certain information sharing practices and protect yourself from unwanted targeted marketing. While you can’t opt out of all information sharing, you may be able to limit the number of unaffiliated third party entities that gain access to your information.
8. There Are Limits To What Debt Collectors Can Do to Pursue a Debt
Having a debt sent to a collection agency is bad enough. When this happens, it usually means that you also owe additional money for fines, penalties and late fees. Worse yet, this bad debt will now show up on your credit report and will usually result in a lowered credit score. The whole thing can be super stressful and embarrassing.
So the last thing you need on top of that is an aggressive debt collector without a sense of boundaries. Fortunately, there are rules designed to impose and protect those boundaries. You have the right to ensure that debt collectors know where to draw the line. The terms of the Fair Debt Collection Practices Act place clear limits on when, where and how debt collectors are permitted to pursue debts.
According to an article from Bankrate, the Act “limits the actions that third-party debt collectors and agencies can take to pursue unpaid debts that are sent to collections. The FDCPA requires debt collectors to call between the hours of 8 a.m. and 9 p.m., for example, and allows consumers to request that debt collectors stop contacting them at work.”
The primary goal is to ensure that debt collection efforts do not escalate to the point of harassment. Of course, it goes without saying that it is your responsibility to either satisfy any outstanding debts or diligently dispute those which you believe are not valid. Anything less can carry ongoing and increasingly severe consequences for your credit rating. That said, you have legal recourse against debt collectors who might otherwise press for payment using aggressive, intimidating and humiliating tactics.
If you are on the receiving end of aggressive debt collection efforts which violate these protections, you may file a complaint with the federal government indicating that you’ve been targeted with harassment. Check the website for the Consumer Financial Protection Bureau for step by step details on how to file a complaint.
9. You Enjoy Specific Protections Against Error and Fraud With Electronic Transactions
Online banking, shopping and account maintenance are all very convenient developments, of course. We have the access and ability to conduct transactions anytime and anywhere. That’s the good part.
On the other hand, these same developments have made us increasingly vulnerable to certain risks. Electronic transactions heighten our susceptibility to computer glitches, user errors, and even hacking. Fortunately, there are laws designed to ensure that we, as consumers, don’t bear the brunt of the occasional technological failure.
That’s why, among your consumer rights are those which provide certain practical, financial and legal recourse against the inherent risks of electronic transactions.
According to the text of the actual bill as archived at the Federal Trade Commission website, The Electronic Funds Transfer Act “requires financial institutions to adopt certain practices respecting such matters as transaction accounting, and error resolution, requires financial institutions and others to have certain procedures for preauthorized transfers, and sets liability limits for losses caused by unauthorized transfers.”
In other words, the onus is placed on your credit card issuers and banking institutions to create clear conditions for both the protection of electronic transactions and the resolution where errors occur.
10. You Have the Right to Data Security and Protection Against Bad Actors
In fact, the responsibility of your credit card company to provide protection goes quite a bit further than just securing transactions. These financial institutions are in possession of valuable, sensitive and personal data on you and millions of others. You have a right to know that this data is in good hands.
While you have your own responsibility in keeping your information and accounts safe and secure, you should also be aware that your lender is legally responsible for helping to ensure your protection. Credit Card companies must exercise all due diligence in accordance with the law to keep your data secure, to protect private and sensitive information from security breaches, system hacks, and identity theft, and to notify consumers swiftly when data is compromised..
Indeed, according to an article from Investopedia, “The Fair and Accurate Credit Transactions Act (FACTA) is intended to help prevent identity theft and credit-related fraud in an increasingly online economy. The law requires creditors and reporting agencies to protect consumers’ identifying information and take steps to guard against identity theft.”
This will generally include proper encryption of financial transactions, surveillance and cybersecurity measures that are effective and up to date, and clear systems in place for helping customers recover damages when these measures fail.
The section above only really scratches the surface when it comes to your credit lender’s responsibilities. Indeed, if you are seeking a more complete understanding of the rules to which your credit card issuer is beholden, check out the strategies that credit card companies are legally required to use in order to ensure your protection and privacy.