| PROTECTIONS FOR THE CONSUMER
Q. How does the Truth in Lending Act affect me?
A. The federal Truth in Lending Act (TILA) helps you to choose
credit wisely by requiring
credit grantors to give you plenty of information before you make a choice.
However, the law
alone cannot protect you fully. You have to make it work by being an informed
consumer.
The TILA does not set finance charges, nor does it tell you what rates
are fair or unfair--
even if we knew what those terms mean. In some states, laws exist to prevent
you from paying
finance charges that are thought by legislators to be too high, but in
most cases it is competition
that serves to keep credit card rates in line, and they have been declining
in recent years. But for competition to be effective in controlling rates,
you must use the information provided by the
TILA to select the credit card that best fits your needs.
Q. How can I limit the amount of finance charges that I pay for
credit?
A. Your shopping for credit plays a key role in limiting and
minimizing the finance charges that
you must pay. It does not matter whether you are looking for closed-end
credit (installment
credit) or open-end credit (revolving credit). And even though most states
impose rate ceilings
on various credit grantors or types of credit--for example, state law
usually limits the rates that
finance companies may charge--your shopping can still save you money.
In shopping for the best terms for you, check The Wall Street Journal
and other
newspapers that frequently publish shopping guides to credit cards from
financial
institutions that cover all of the relevant terms discussed above. You
can easily shop for
credit cards and compare terms by logging on to www.cardtrak.com. The
Federal Reserve
Board also gathers credit card rate terms for publication.
Q. In shopping for a credit card, I found that one credit card
issuer charges a higher rate than that allowed by my state law. How can
that be?
A. Many states impose rate ceilings on retail or bank credit
cards. However, these limits do not
always apply across the board. For example, under federal law national
banks may "export" their finance charge rates on credit cards.
(State-chartered, federally insured institutions generally have the same
exportation rights.) Thus, a national bank may issue cards from an office
in South Dakota, a state that has no rate ceiling on bank cards, so the
bank may charge cardholders in Iowa any rate the agreement specifies.
While most retailers selling to Iowa consumers may not charge rates on
their credit cards higher than Iowa law permits, some major retailers
have established credit card banks and issue cards from those banks. In
those instances, they abide by the laws of the state in which the bank
is located. In real life, competition forces national banks and retailers
to keep their rates in line with those charged by state-chartered banks,
other financial institutions, and retailers. In this example the pressures
of the marketplace--the choices made by informed consumers--set the rates.
The law does not set them.
Nonetheless, if you believe that the rate being charged violates state
law, you should report
the case to the Office of Consumer Protection (or similar office) or your
state's attorney general.
Competition and enforcement activities usually prevent such violations,
but if there is a
violation, you may be able to recover all of your finance charges plus
a penalty, depending upon your state's law.
Protect Your Credit Cards and Know Your Rights
1. Sign new credit cards as soon as they arrive. Cut up and throw away
expired credit
cards. Destroy all unused pre-approved credit applications.
2. In a safe place, keep a list of your credit card numbers, expiration
dates, and the toll-free
telephone number of each card issuer to report missing or stolen credit
cards and possible billing errors.
3. Don't lay your credit card down on a counter or table. Hand it directly
to the clerk or
waiter. Keep an eye on your card after you give it to a clerk. Make sure
that he or she imprints
only one charge slip and, if he or she makes an error and has to imprint
a second charge slip,
tears up the first one. Take your card back promptly after the clerk is
finished with it, and make
sure that it is yours. Tear up any carbons when you take your credit card
receipt.
4. Never leave your credit card or car rental agreement in the glove compartment
of a car
or the credit card in an unlocked desk drawer, grocery cart or hotel room.
5. Never sign a blank credit card receipt. Draw a line through any blank
spaces above the
total when you sign receipts.
6. Open credit card bills promptly, and compare them with your receipts
to check for
unauthorized charges and billing errors. If your monthly statement doesn't
arrive on time, call the issuer immediately.
7. Write or telephone the card issuer promptly to report any questionable
charges. As a
practical matter, most consumers would prefer to call the card issuer’s
800 number for billing
questions, and most disputes can be settled in this way. (You can find
the correct 800 number on your billing statement.) However, written inquiries
will leave a paper trail that might be helpful in certain situations,
and might better preserve your legal rights. Written inquiries should
not be included with your payment. Instead, check the billing statement
for the correct address for billing questions. Either a written or telephone
inquiry must be made within 60 days of the
statement date to guarantee your rights under the federal Fair Credit
Billing Act.
8. Never give your credit card or checking account number over the telephone
unless you
make the call. Never put your credit card number on a postcard or on the
outside of an envelope.
9. If any of your credit cards is missing or stolen, report the loss as
soon as possible to the
card issuer. Follow up your telephone calls with a letter to each card
issuer. Send each letter by
certified mail and keep a copy. The letter should contain your credit
card number, the date the
card was missing and the date you called in to report the loss.
10. If you report the loss before a credit card is used, the issuer cannot
hold you
responsible for any subsequent unauthorized charges under federal law.
If a thief uses your card
before you report it missing, the most that you will owe for unauthorized
charges on each card is $50, though if you lose a number of cards you
could be out hundreds of dollars.
11. Identity theft is a growing problem. If your credit card has been
out of your hands (for
example, taken by a waiter), the individual may run it through a small
device that can read and
store the magnetic stripes on the back of credit cards. Selling for around
$100, these devices are readily available. The “skimmer” can
then load the data onto another credit card to use at will. You will become
aware of the theft when charges that you never made show up on your bill.
Notify the card issuer immediately and call the Federal Trade Commission’s
Identify Theft
Hotline toll-free at 1-877-IDTHFT. You can obtain without charge a helpful
booklet, Theft, by
writing the FTC, 600 Pennsylvania Ave., NW, Washington, DC 20580 or on
the web at
www.ftc.gov
12. Federal law requires that creditors who allow a grace period to pay
your monthly bill
get the bill to you so you have two weeks to pay before the grace period
ends.
13. Federal law requires a creditor to post your payment promptly; to
credit overpayments
or other credits to your account and refund the money to you on request
or after six months; to
promptly notify card issuers of returns and card issuers to promptly credit
returns; and prohibits a credit card issuer from setting off your credit
card debt against your checking account or savings account without your
consent (however, you often give your consent in signing the credit card
agreement, since written notice of the offset policy is often included
there).
Q. What if a credit grantor fails to obey the TILA?
A. You should inform the proper federal enforcement agency, as
listed in the back of this
chapter. Violations include failing to disclose timely information as
required under the Truth in
Lending Act or giving you inaccurate information. To enforce your rights,
you may bring a
lawsuit for actual damages (any money loss you suffer). You may also sue
for the greater of
twice the finance charge or one-hundred dollars. However, the most you
can recover, even if the finance charge is high, is one-thousand dollars.
If you win the lawsuit, the law also entitles you to court costs and attorneys'
fees.
|
