Credit Card Laws - All That You Need To Know
Cclaw

With the modernization of the finance and banking industry, usage of ready cash and cash flow for various purposes are diminishing day by day. Studies have proved that customers are more comfortable using a Debit Card or a Credit Card for shopping anywhere. It has been observed that customer generally opt to pay by credit card when they shop in bulk in malls or departmental stores.

Paying through credit card is hassle free as you don’t have to carry cash in bulk in your wallet. It also becomes risky to carry cash. Credit card also becomes very handy and useful when you are travelling and carrying of bulk cash is not safe. Also packing the cash in your wallet gives you a very uncomfortable and unsafe feeling of being robbed.

Points to Note

Credit cards can be your friend, if you are aware of the terms and conditions that govern you credit cards. Following checks should be ensured while you are using a credit card-

·      Check for the credit limit and cash limit of usage

·      Understand the credit period and credit policy

·      The difference between minimum payment and the full payment outstanding on your card accounting

·      The rate of interest charge and the interest calculation period applicable on your card account

·      Late fine and minimum amount policy to pay on your card

·      While you might not read the entire set up documents while applying for the card, but it is advisable to read them to be aware of any hidden charges

·      You should also check for loan facilities while applying for the card. There are many banks who offer loan facilities against your credit card

·      Does your credit card give you insurance coverage against any unforeseen incidents

·      Check on the due date and late fine applicability on your card account.

Laws of the Land for Credit Card

Since credit card forms a major chunk of resources which the customer chooses to increase the purchasing power of a customer, every country has its own rules and regulations to abide by. All the financial institutions which are governed by the laws of the country will have to abide by the aid down laws. In the United States, not following the rules will result in major cacophony in the economy.

In the United States, the Government has strictly laid down certain following guidelines which are to be followed by both the issuer and the issuant-

·      Rate of Interest cannot be increased out of own whims and fancies. Strict regulation has been passed to protect the interests of all the consumers. All the credit card companies have to abide by. Not following the rules will lead to cancelation of license and stop all further operations

·      The companies should give 45 days’ notice prior to any changes in the interest rates of the customers

·      Cardholders should have the complete liberty to use the card and pay off all the dues before he moves to the new cycle

·      No retrospective increase of rate of interest allowed

·      Credit Card companies cannot restore any time re pricing model without the consent of the customer. Any change in this will be punishable by law.

·      On time payment customers should not suffer any penalty. In fact, card companies should design discount and reward point for these customer to boost up the loyalty for a mutually benefitting relationship.

·      No billing allowed on double cycle basis. The law also asks the customers to read and understand the bill thoroughly. For any doubts whatsoever, they should connect with the customer care set up dedicated by the card companies

·      Loyal and on-time payment customers who have been affected by rise in interest rates, have to be returned to the previous rates after six consecutive payments. The companies should review all such accounts periodically

·      Credit Card companies should not fool customers with the due dates. They should send the bills to the customers billing addresses prior to 21 calendar days before the due date.

·      Due date cannot be changed monthly. Due date should fall on the same day of each month. It can be changed only on customer’s request on mail.

·      Credit Card companies while periodically reviewing accounts should check for late fine and no unnecessary late fine to be charged

·      Customers should be having clear idea on the rate of interest. Credit Card companies should not use misleading terms such as “best rate”, “prime rate”, and “Fixed rate”. The rates have to be clearly stated in the card holder’s agreement.

·      On request from the card holder, the companies are bound to set limit on the usage.

·      Credit Card companies will not charge any over-the-limit when the customer has specified a fixed credit limit.

·      Fair policies in terms of credit and allocating payments are to be ensured by these companies.

·      For the over-the-limit card companies are only allowed to charge up to 3 billing cycles of the customer.

·      For cases of subprime card, which are targeted for vulnerable customers, fees are to be paid up front. This exercise has to happen before the card is issued to the card holder.

·      The credit card law has also applied to young adults. Credit card companies can be issued legal order if they are found issuing cards to anyone who is under 21.

·      Anyone under the age of 21 can only opt for a card if they have a guarantor who is an adult and has agreed to pay off the debt.

·      Since there are now clear and precise due dates and time, cardholders are to make the payments by 5pm on the due date.

These reforms in the Credit Card laws are taken towards protecting the customer’s interest. All the laid down laws have given the customers a privilege to use the credit card to their benefits and comforts, but they are also advised to be doubly sure when they sign for a credit card and read all the offer document carefully so that later on they don’t have to move to the court and face inconveniences.

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