Credit Cards

Most people have at least one credit card and use it on a daily basis. Lenders and credit card companies are constantly creating new sales pitches and products to entice cardholders to sign up for the latest card they're offering. Before signing up for a new card, it's important for consumers to understand the laws and regulations governing the use of credit cards.

This article provides information and resources related to consumer credit cards, including a guide to choosing the best card for you. In this section, you can also find an overview of the various laws that affect credit cards, such as the Truth in Lending Act, the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD), and other consumer credit protection regulations. 

It's crucial for individuals to be aware of their rights and responsibilities when using credit. This includes being familiar with reporting agencies that play a role in assessing creditworthiness.

Choosing the Right Credit Card

Many credit card issuers offer promises for rewards if you sign up with a new credit card, ranging from free travel to cash advances. It's important to read and understand the terms of a credit card before signing up.

Two important things to pay attention to when reviewing the terms of a credit card are the annual percentage rate (APR), which is the interest rate, and any fees associated with the credit card. The APR is the cost of borrowing money on a yearly basis. The lower the APR, the less money it will cost to borrow money. When examining the APR, you should ask the following questions:

• Is there an introductory or teaser rate?
• Is it a fixed or variable rate?
• Is there a grace period between your purchases and when the bill is due?
• How will the balance for the APR be calculated?

In addition, it's crucial to be aware of your credit limit. Your credit limit is the maximum amount you can borrow, set by financial institutions. Understanding the due dates, minimum payments, and billing cycles for your monthly statement is essential to avoid late payments, including interest charges.

It's also important to pay close attention to the types of fees you'll be subject to by having a credit card. Some examples of common credit card fees are:

• Annual fees
• Over-the-limit fees
• Transaction fees
• Late fees for late payments

Since fees are how many credit card companies make their money, it's important to read and understand exactly what fees will be associated with your consumer credit card. Be mindful that late payments may result in interest rate increases, affecting the overall cost of borrowing.

Some credit card rewards programs may require an opt-in. Be aware of any conditions related to earning rewards, especially during the first year of card membership.

Credit Card Laws

The Truth in Lending Act (TILA) and the CARD Act are the two major laws that govern credit cards. The Truth in Lending Act requires credit card companies to disclose the key terms of the credit card in the application. The CARD Act was passed more recently and requires credit card companies to:

• Provide a 45-day notice for any key changes to the terms of a credit card
• Send the credit card statement 21 days before the balance is due

The Act also prevents credit companies from retroactively making changes to the rate on an existing balance. In the context of debt, the Fair Debt Collection Practices Act (FDCPA) governs the activities of debt collectors. The Act also ensures fair and ethical debt collection practices.

In addition to these acts, several federal agencies play a crucial role in overseeing and enforcing regulations related to credit cards and financial services.

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are governmental bodies that work to ensure fair and transparent practices in the financial services industry. The Fair Credit Reporting Act (FCRA) is a federal law enforced by these agencies, governing credit reporting and protecting consumers from inaccurate or unfair practices.

Congress, through federal law, empowers these agencies to regulate and enforce rules that safeguard consumers' interests in the realm of credit cards. The Federal Reserve, as the central banking system of the United States, also plays a role in shaping policies related to consumer credit.

Hiring an Attorney

In general, picking or using a credit card doesn't require the help of an attorney. However, if you have an issue with a credit card that you don't think you can handle alone, you may want to contact a local consumer attorney to discuss your legal options.