Credit Card Laws

From LoveToKnow Creditcards

You can find plenty of conflicting information regarding credit card laws online. If you stumble across something regarding credit cards that seems particularly outlandish – such as claims that you don't have to pay your bills because of some obscure law – then check the facts before assuming that it's valid.

Law Books

The Federal Trade Commission

When you are searching for accurate legal information regarding credit cards one of the best places to use as a reliable source is the Federal Trade Commission, often referred to as the FTC. This organization is tasked by the United States government to protect consumers and investigate consumer complaints. Since the FTC is the authority when it comes to laws regarding credit cards, it makes sense to use this organization as your first source. The information presented by the FTC is accurate and reliable.

Examples of information pertaining to laws available through the FTC include:

  • Detailed information detailing how credit card debt can legally be reported on a credit bureau report
  • Legal methods for combating credit card fraud
  • Your legal rights regarding credit card charge disputes
  • The laws pertaining to electronic processing of checks for credit card payments
  • The legal ramifications of cosigning for a credit card
  • The general legal obligations involved with divorce proceedings regarding credit cards
  • A review of the Credit Practices Rule, which legally prohibits certain practices for credit card debt within a consumer credit counseling service

If you are searching for a comprehensive data base of laws on credit cards, the Federal Trade Commission is the very best place to start.

Other Sources

Type "credit card laws" into an Internet search engine and you are bound to get bombarded with websites purporting to eliminate credit card debt legally for a certain fee. Before getting involved with a credit card debt elimination scheme keep in mind that there are only three legal ways to eliminate credit card debt:

  1. Pay it off
  2. Have the credit card debt discharged in a bankruptcy
  3. Come to an agreement with the credit card company to accept a smaller balance as payment in full, also referred to as "debt settlement"

Be apprehensive of any company that claims to utilize little-known credit card laws in order to eliminate credit card debt. After all, if there was indeed some obscure law that allowed people to legally walk away from credit card debt without bankruptcy or other method then it would not stay obscure for very long.

Important Credit Card Laws

There are some laws that are important for cardholders to be familiar with:

  • The Equal Credit Opportunity Act: Credit card companies are not allowed to factor in certain bits of information when considered whether or not to extend credit to applicants. Applicants should be reviewed solely on the basis of their creditworthiness, and not on their race, gender, or other factors that are not directly related to their ability to repay a debt.
  • The Fair Credit Billing Act: Credit cards and other revolving credit lines are governed by this law. This act protects consumers from being obligated to pay erroneous charges and fees that may appear on their credit card statement. This law not only pertains to cardholders who encounter errors on their credit card statements but also cardholders who become victims of unauthorized charges on their credit cards from theft. This act dictates how to legally respond to these situations in order to preserve your rights as well as limiting your financial obligation for unauthorized charges.
  • The Fair Debt Collection Practices Act: Laws dictate how a credit card company or collection agency can go forward in pursuing late payments from customers. There are specific actions debt collectors can legally take as well as steps consumers can take in order to stop debt collectors from contacting them again. Collection agencies may not allow collectors to threaten customers or make false statements that might scare the customer into making payments.

It's important to know the basics of these laws so you will know if something illegal is happening with regards to your credit card account..

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Comments

Kjsacramento,

Congress passed and the President signed new legislation on May 22, 2009 to stop the practices that you experienced. Unfortunately for consumers, card issuers have until August of 2010 to fully implement the elements of the new Act. For more information on the new Act check out the slideshow here on LoveToKnow Credit Cards.

-- Contributed by: SusanWeber

First Advanta raised my rates from 17% to 35% on the 1 year anniversary despite excellent credit, so I was lucky enough to be able to pay them off. Then they came back offering me a 3.99% rate for the year on balance transfers when the payoff was a hardship and things were tough for me. I had just used the card for a minor amount but paid it off first and then requested some balance transfers. They did not apply my payment to the prior balance but instead, started charging me for the balance transfers prior to funding them and applied my payoff to that instead! Sucking me into 35% interest on the paid-off prior balance! Now, a month later they decided to close all their business accounts and are dropping my limit so interest is causing me to go over my limit and forcing escalated payments on me to cover the regular payment and the amount they CLAIM is over my limit! I can't afford to have them escalate the payments! And I don't like being cheated on the interest rate. I am expecting any day to have them drop my limit to 0 and try to escalate the whole thing!!! Someone help me with these crooks! Isn't there a regulatory agency I can turn to about these outrageous practices?

-- Contributed by: kjsacramento

Cory,

A card issuer can take a person to court for any unpaid balance if the cardholder has not held to the Terms and Conditions. In most cases, however, with an $800 balance a card issuer is more likely to shut down the credit card and attempt to set the cardholder onto a monthly payment plan. If unsuccessful in collecting the debt, the card issuer would then "sell" the debt to a collection agency. If you are having trouble paying off the $800 in debt, contact Capital One and see if you can renegotiate your debt and set up a payment plan.

-- Contributed by: SusanWeber
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