Education is one aspect of unlocking the future for financial success, by preparing you for a career that provides sufficient income for all of your needs. A college degree, however, is just another piece of paper in a frame on your wall unless you put what you’ve learned into practice. It’s the same with non-academic areas of life. You may have sat through economics and finance courses without a thought to incorporating those concepts into your daily life. If that’s you, you need to begin today or risk having to learn through the school of hard knocks.
Living on campus or moving away from home for the first time is often an eye opener for young people. Having to keep to a tight budget by balancing income with expenses is a new experience – one that makes many more appreciative of their upbringing. As life goes on, major purchases often paid for on credit will most likely come into the picture along with bigger responsibilities and worries. This is where many people get into trouble and it’s where education is a major key to avoiding the devastation that comes with overwhelming debt.
In an attempt to protect consumers against unfair practices by lenders and employers, along with helping prevent unintentional debt, the Federal Reserve has enacted a variety of consumer credit laws. Knowing these legal protections, which in part, were designed to make credit available to everyone who qualifies, is especially beneficial to young people and those just entering the workforce or anyone beginning to establish a credit history for the first time.
The first attempt to legislate rules designed to protect consumers with credit was called the Truth in Lending Act, enacted in 1968. Its purpose was to promote more transparency by requiring specific information about the terms and costs included in the terms of credit offers. With this information in hand, it is easier to compare credit offers when looking to determine the best one to meet your specific needs. Truth in Lending also gives you the right to cancel certain transactions that involve a lien on your principal dwelling.
A little more than forty years ago, the Fair Credit Reporting Act (FCRA) became federal law and set the stage for consumer credit rights in the United States. It regulates the collection, dissemination and use of consumer information, including your credit information. With the three major credit-reporting bureaus collecting data on every consumer and no one monitoring for accuracy, this law allows you to review your personal information and request that errors be deleted and discrepancies corrected.
In 1974, the Equal Credit Opportunities Act was passed to protect consumers who want to borrow on credit from discrimination. It specifically prohibits lenders from refusing to approve credit based on religion, race, nationality, marital status, gender or age. It also forbids basing a rejecting on the fact that an applicant receives public assistance of any kind.
The most recently enacted and perhaps most influential law is the Credit Card Accountability, Responsibility and Disclosure Act, easily remembered by the abbreviate term, the Credit CARD Act. It encompasses areas previously unregulated such as interest rates, fees and billing statements. It‘s specifically designed so that consumers may better understand how much they are paying when they borrow on credit. Its provisions include the following:
• Prohibits interest rate increases in the first 12 months of an account opening
• Requires a minimum of 45 days notice before interest rate or fee increases
• Rate increases will only apply to new purchases
• Monthly statements must arrive 21 days before the due date
• Payments must be applied to the highest interest balance first
• No over-the-limit charges may be applied unless you opt-in for overdraft protection
• No non-use charges may be applied
If you happen to be one of the unfortunate people who has a credit account handed over to a collection agency, knowing the rights you have through the Fair Debt Collection Practices Act is sure to be helpful in dealing with the aggressive nature of debt collectors. This law covers secured and unsecured loans including car loans, mortgages and credit cards that are sent to collections. Here’s what you can expect:
• You will receive a validation letter from the collection agency within five days of their initial phone call about your debt. It will show you who you owe, how much and what you need to do… if you do not believe you owe the money.
• You cannot be threatened or harassed by the caller. Offensive or abusive language is also forbidden.
• You will only be warned of legal action if they actually intend to follow through and file a lawsuit.
• You have the right to demand in writing that all contact cease. You can expect a final call to acknowledge your request and also be give notice of legal action, if they plan to proceed with a lawsuit.
If any of your rights have been violated, take action by writing a letter to the creditor asking that the action be resolved. You may want to consider contacting an attorney if a large amount of money is involved or when filing a formal complaint with the Federal Trade Commission.
The Bureau of Consumer Protection, the FTC, the U.S. Food and Drug Administration and various other state agencies continue to watch over consumers. They strive to protect them from unfair, deceptive, or fraudulent practices. Visit you state website or Federal agency to learn more about the agencies in your state.
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Vanessa May is a regular contributor to www.wowcreditcards.com along with other financial sites throughout the blogging community. Her goal is to educate consumers with the use government and other reputable sources to provide relevant news on money management, understanding debt services, finding low interest credit cards and a wide range of other finance related topics.