Many rules and regulations affect what credit card companies can and cannot do. These governing principles have changed often throughout the years, with a significant amount of the regulatory adjustments being brought about by legal decree. In fact, the new credit card law (CARD Act) which went into full effect in August 2010 represents one of the most sweeping pieces of credit card legislation instituted in years. Therefore, to keep you apprised of all the changes we have compiled what amounts to a credit card user’s bill of rights that clearly establishes consumer privileges as well as credit card company requirements and limitations in terms of various credit card features.

Interest Rates / APR’s:

• Your credit card’s interest rate may not be changed during the first year unless it is tied to a variable index, an introductory rate concludes, you do not follow the terms of a debt management agreement, or you are more than 60 days late on a payment.
• A penalty APR or any other interest rate increase can only be applied to an existing balance if you are over 60 days late on payment.
  • This includes promotional programs that waive interest rates for a certain period of time (effective October 1, 2011).
  • It can be applied to all future transactions (i.e. transactions made 14 or more days after receiving notice of the penalty APR).
• The amount of your payment above the minimum payment must be applied to the balance with the highest interest rate.
  • The minimum payment amount is applied to the balance with the lowest interest rate.
  • If you made a purchase with a deferred interest rate (e.g. interest does not begin to accrue until a year after purchase) you may be given the choice of applying your monthly payments to this balance so you can pay it off before interest kicks in. If you are not given this option, your payments for the two billing periods prior the end of the no-interest period will be applied to this balance.
• Interest rates can only be applied to balances held during the current billing period (creditors were previously able to determine interest charges by calculating average daily balances for both the current and previous billing periods, which often made for higher interest rates being assess).
• If your interest rate rises, you may request a reduction after six months of on-time payments.
  • This request must be evaluated within 45 days.

Fees:

• You cannot be subject to fees (excluding penalty fees) totaling more than 25% of your credit card’s initial limit during the first your account is open.  As of October 1, 2011, this includes application and similar fees assessed before your account is open.
• You cannot be charged a penalty fee in excess of $25 unless one of your last six payments was late or your credit card company proves to regulators that costs brought about by the penalized action justify a higher penalty. However, no matter what…
  • a late fee cannot exceed your minimum payment.
  • you cannot be charged with an over-limit fee that is more than the amount by which you exceeded the limit.
• You cannot be charged more than one fee for any single event or transaction that warrants penalty (e.g. two different types of late fees for one missed payment—think the legal concept of double jeopardy).
• You cannot be assessed fees for account inactivity.
• You are liable for, at most, $50 if you card is lost or stolen.

Communications / Statements:

• Credit card companies must disclose a card’s terms (APR, annual fee, interest-free periods, etc.) in writing.
• Credit card companies must provide at least 45 days notice before changing your account’s fee structure or interest rate and prior to making any other significant changes to your terms; however…
  • Companies do not have to notify you before a variable interest rate changes, your introductory rate concludes and the regular rate begins, or your rate increases because you are not abiding by the terms of a debt management agreement.
  • Once requisite notification of any change is provided, you have the right to cancel your card before increased fees are assessed though your credit card company may, in turn, revoke charging privileges and/or raise your monthly minimum payment in order for full balance payment in an expedited time frame.
• Your credit card company must explain the reasoning behind any interest rate increases.
• Credit card companies must denote clearly on your bill how long it will take to pay off your balance when only paying the minimum amount and how much you would have to pay monthly in order to be at zero balance within three years.
• Lenders must use uniform methods to calculate the cost of credit and must disclose this cost.
• You have the right to dispute payments.
  • Disputes must be mailed and received by the credit card company within 60 days of the date on the account statement that included the initial potential error.
  • Your credit card company must acknowledge the dispute within 30 days and either correct the mistake or send a letter explaining why there was no error within 90 days.
• Lenders must use uniform means of calculating the cost of credit and must disclose this cost.
• You must expressly agree to allow purchases that exceed you credit limit.
  • If you agree to allow over-limit transactions and end up exceeding your limit, your credit card company may assess only one fee per billing period
  • You can choose to revoke the ability to exceed your limit at any time.

Payments:

• Your credit card company must mail you your bill at least 21 days before it is due.
• Your credit card company must provide you with your bill at the same time each month.
• Payment cannot be required to be placed prior to 5 p.m.
• If your payment date falls on a holiday, you have until the day following the holiday to make payment.
• Mistakes on your bill must be corrected and may not damage your credit score.
• You have the right to dispute payments.
  • Disputes must be mailed and received by the credit card company within 60 days of the date on the account statement that included the initial alleged error.
  • Your credit card company must acknowledge the dispute within 30 days and either correct the mistake or send a letter explaining why there was no error within 90 days.
• Mistakes on your bill must be corrected and may not damage your credit score.

Credit card eligibility:

• If you are under 21 years old you must exhibit payment ability (i.e. prove reliable income) or have a co-signer in order to open a credit card.
• Credit card companies must evaluate your individual (not household) income prior to issuing you a credit card.
• You may not be discriminated upon based on sex, race, religion, marital status, age, or national origin.
• You may not be discriminated against because you receive public assistance.
• You cannot be issued an unsolicited credit card.
• You may not be discriminated upon based on sex, race, religion, marital status, age or national origin.
• You may not be discriminated against because you receive public assistance.
• You cannot be issued an unsolicited credit card.

Debt Collection

• Debt collectors must identify themselves in every communication.
• Debt collectors must apprise you of your right to dispute your debt.
• Debt collectors must provide contact information for the creditor from whom the debt originates within 30 days of receiving a request for such information.
• Debt collectors must mail you verification of your debt or stop the collections process within 30 days of receiving a dispute or request for debt verification.
• Debt collectors may only call you between 8 a.m. and 9 p.m.
• Debt collectors may not use the telephone to intentionally annoy or harass you.
• Debt collectors may not attempt to contact you at work if your employer has forbidden the practice.
• Debt collectors may not use abusive or profane language.
• Debt collectors may not contact you after you have requested in writing that they not do so.
  • Communications expressing the conclusion of collections efforts or the filing of a lawsuit are permitted.
• Debt collectors may not contact you if you have made it known that you are being represented by an attorney.
• Debt collectors may not misrepresent themselves or the extent of your debt.
• Debt collectors may not publish your name or address.
• Debt collectors may not threaten legal action that is not actually being contemplated.
• Debt collectors may not share information about your debt with third parties, excluding attorneys and your spouse.
• Debt collectors may not send you mail with any symbols or writing indicating that you are in debt collections.
• Debt collectors cannot relay or threaten to relay false information to credit reporting agencies.
• You have the right to sue debt collectors in state or federal court.

Credit Reports

• Consumers have the right to free copies of their credit reports from the three major credit reporting agencies every 12 months.
  • Reports may be requested by phone or mail and at annualcreditreport.com.
• Negative information must be removed from your credit reports within a certain period of time.
  • Most information must be removed within 7-10 years.
• If information on a credit report leads to adverse action against a consumer, the organization that used the information must notify the consumer of this fact and identify the source of the information.