Consumer rights for credit and debit cards

The American economy thrives on consumption, and shopping is a quintessential American activity. Consumer rights for credit

In addition to having access to debit and credit cards to finance your purchases, American consumers are also entitled to several consumer rights in the event that something goes wrong with the payment process.

Credit card protections

Even at the point you start shopping for a credit card, the Credit Card Accountability Responsibility and Disclosure Act of 2009, which amended the Truth in Lending Act, kicks in. Consumer rights for credit

The legislation was passed to “establish fair and transparent practices related to the extension of credit.” Issuers have to qualify you based on your “ability to pay” even before approving your credit card or giving you a credit line increase. There are also restrictions on marketing of cards to students and people younger than 21.

This act governs various aspects of your credit card financing, including rules for how issuers can implement interest rate increases and penalty fees for late payments and going over your limit. For example, you can only go over your credit limit, and be assessed a fee for this, if you have previously opted into this feature. Consumer rights for credit

The CARD Act also lays out how card issuers should manage your payments (including establishing when they are due and how to apply your interest payments to different outstanding balances you have, such as for purchases, balance transfers and cash advances). Consumer rights for credit

And it calls for monthly statements to include information that can help you better manage your credit card account. For instance, a card issuer should tell you how long it would take to pay off your card balance and how much total interest you would be charged if you only made your minimum payments each month.

The law also got rid of a practice called “double-cycle billing” that enabled issuers to use your balance in the previous billing cycle, along with your current balance, to determine your interest charges, even if you had paid off that balance. With the change, issuers are supposed to charge interest only as they relate to current balances. Consumer rights for credit

See related: Best credit cards with extended warranty benefits Consumer rights for credit

Fair Credit Billing Act

You also have the Fair Credit Billing Act to take care of your rights when you use your credit card to shop. If you are not happy with a shopping experience – for instance, you made an online purchase that didn’t arrive – you can take recourse to the FCBA. This act applies to credit card-related billing issues. Consumer rights for credit

Some other rights that the FCBA gives credit card holders are:

• In case you did not authorise a charge (if you lost or misplaced your card, for instance), you will not be liable for more than $50 no matter how big the charge is.
• You can dispute charges that are incorrect – for instance, if a merchant overbilled you.
• Issuers cannot overlook giving you credit for payments or returns you make.
• If you see a charge you don’t recognise, you can ask for clarification and proof of purchase.
• Your issuer must send your credit card statement in a timely manner.

See related: “When is a charge on a credit card unauthorised?” Consumer rights for credit

Disputing credit card charges

If you want to exercise your rights under the Fair Credit Billing Act (FCBA), you should write to your card issuer at its address for “billing enquiries,” providing a narrative of your issue as well as your name, address and account number. The Federal Trade Commission advises that you send this letter by certified mail and hold on to your receipt. Consumer rights for credit

You should send this letter within 60 days after you received the statement with the error. The issuer should acknowledge your letter within 30 days of receiving it and will have to resolve your issue within two billing cycles after that. You won’t have to pay the disputed charges while an investigation is ongoing.

U.S. credit card users also enjoy consumer protections under the Fair Credit Reporting Act, the Fair Debt Collection Practices Act and the Equal Credit Opportunity Act. Consumer rights for credit

Make it a point to get a free copy of your credit report from the credit bureaus (which is available for free every week from the credit bureaus through April 2022) so that you know in case something is amiss. For instance, you might find an account you did not open, which could point to identity theft. Consumer rights for credit

See related: How to report and protect yourself from credit card fraud

Debit card protections

Unlike credit cards, debit cards don’t come with robust protections. You are using your own money, which is immediately debited from your bank account when you use your debit card to make a purchase Consumer rights for credit