by Amy Lillard
Credit and credit cards are an integral part of our economic system today. But there is a lot of misinformation and misunderstandings about credit. In this continuing series, we examine key concepts, tips and best practices when it comes to credit cards.
(11/15/2012) Using credit cards can feel like freedom and entrapment at the same time. A credit card can make purchases possible, but can also represent temptation and a gateway to increasing debt. And with a confusing set of rules and regulations for each card, it can be difficult to maintain control.
Thankfully, credit card owners do have key rules and regulations protecting them. Laws like the CARD Act which went into effect in 2010 spell out rights held by borrowers. These rights include:
• Fair application review. Credit card companies are prohibited against discrimination on the basis of gender, race, religion, nationality, age, marital status or public assistance receipt.
• Protection from rate increases: Credit card companies can change interest rates frequently. But they are now required to notify cardholders at least 45 days in advance, allowing consumers to plan or research other options.
• Mandated rate review: Credit card companies are now required to assess APRs for each cardholder every 6 months, determining if a reduction in APR is possible.
• Billing notice. Credit card companies are required to send you a billing statement at least 21 days before payment due date to ensure you can pay within the grace period or otherwise plan ahead.
• Fair allocation of payment. Credit card companies used to apply payments to balances with lower interest rates first, which resulted in no real dent in debt. Now they must apply payments to balances with the highest interest rates first.
• No payment fees. Paying your bill via phone, mail or online is all free, depending on what you prefer.
• Notification of changes to agreement. In addition to advance notice of change to interest rates, credit card companies must notify card holders of other major changes to terms, and offer methods to opt out.
If you feel a credit card company is infringing on your rights as a cardholder, you can file a complaint with The Consumer Financial Protection Bureau, the regulating agency enforcing laws for credit card companies.
For Additional Reading:
Credit Card Bill of Rights: http://www.cardhub.com/edu/credit-card-bill-of-rights/
Credit Card Training Manual: http://www.consumer-action.org/english/articles/credit_cards_what_you_need_to_know_training_manual/
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