Federal Protections for Credit Card Users

In the current climate of fast and easily available credit, it pays to know your protections as a credit card holder under federal law. Here is a six point summary of your protections under federal law:

Getting a Card
Under federal law, a credit card issuer can provide a renewal card or substitute card to a current cardholder, but cannot issue a new card unless requested to do so. Don’t make payments on any card for which you did not apply.

Payments must be credited on the day that the issuer receives your check. However there are two exceptions: First, a creditor can delay posting your payment if no additional charges are incurred. Second, you must follow the requirements regarding payment set forth by your creditor. For example, if you don’t send your payment to the correct address or if you don’t use the provided billing envelope then you could be left with extra charges or late fees because your payment was not received in a timely or correct manner for processing.

Credit Balances
If you have a credit balance of $1.00 or more then the credit card company is required to provide either a refund or to maintain your credit balance. By law, your credit company must send a refund within seven business days of your request.

Billing Errors
All issuers must provide a statement concerning their rules for correction of billing errors. During the time that a billing error is under investigation, consumers are not required to pay the amount in question.

Unauthorized Use
You can be held liable for charges up to $50 if an unauthorized individual uses your credit card. Look on your card or billing statement for a toll-free number to report suspected theft, lost cards or unauthorized use.

Resolving Disputes
If you dispute the charges on your statement or have a problem with merchandise purchased on your card, you can withhold payment if you have made a good faith effort to resolve the problem. Rules vary if the card was a bank or travel or entertainment card so be cautious and do some research before withholding payment on any charges. In addition to varying amounts depending on the type of card, rulings pertaining to dispute resolution vary state to state. Check with the small claims court process in your state.

Get smart about credit use or you’ll find that your “easy” and “free” credit may prove to be more expensive than your budget can afford.

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