There can be no doubt credit cards are a popular way to pay and keep track of consumer purchases. What some people fail to realize soon enough is that carrying a balance on a credit card is exactly the same thing as borrowing money. The difference between credit card debt and a loan is that loans get paid off. Credit card debt can conceivably last forever.
This isn't to say that a person who uses credit cards has no rights, however. If you use a credit card, you are subject to a cardholder agreement with the issuer, which is usually a bank. You are also subject to various laws that govern how credit card debt is handled, what your rights are and what the rights of your financial institution are at the same time.
By and large, credit cards are unsecured debt. This means there is no collateral pledged to the lender to cover the value of the funds loaned to you when you buy something and carry a balance. A "secured" loan, on the other hand, requires collateral which can be seized by the bank to satisfy the value of the loan in the event you fail to pay.
Because credit cards are unsecured, banks have fewer options for collecting on borrowed funds if you default. They can cancel the card, of course, but they can't drive out and seize your house or jewelry. Unsecured debt generally provides a bank with the weakest claim against your assets in the event of a dispute, and is almost always at the back of the line if you declare bankruptcy.
Under the law, your card issuer must notify you of a payment due at least 21 days in advance. This is to prevent unscrupulous card issuers from cashing in on late fees because as a customer, you didn't have enough time to pay your bill. If your billing statement is inaccurate, you generally have up to 60 days to file a dispute as well, and your card issuer must honor it.
There are few consumer rights more numerous than those surrounding your credit report. If you have credit cards, you have a credit score and a report which tracks your use of credit, payment histories, balances owed and so forth. This report follows you from bank to bank.
You have the right to view your credit report annually, and credit reporting agencies are required to provide you with a free copy. You also have the right to dispute inaccurate information in your credit report. The reporting agencies are required by law to make sure the information contained in your report is accurate, and they must honor your requests to change the information if you can provide evidence of error.0
Credit cards are among the most complicated payment instruments available to the average consumer. Educating yourself about your rights is crucial if you are to protect yourself against being overcharged, unfairly dinged on your credit report or placed in a difficult situation with your lender. As with all financial subjects, knowledge is key.