How the Truth in Lending Act Protects Credit Card Users

The Truth in Lending Act was brought about in 1968 by Congress in an attempt to help protect consumers. The main area that it affected was the credit card industry and the way that they do business. As a result of this act, credit card companies had to adhere to certain standards in business and were unable to do some of the things that they were used to doing. As a credit card holder, there is a good chance that you have had problems with the companies that issue them. You may have outstanding balances that need to be paid and debt accumulating by the day. Therefore, understanding your rights as a credit card holder is important to know how to eliminate the problems. Here are a few ways that the Truth in Lending Act protects credit card users. 

Disclosure

Before the Truth in Lending Act, credit card companies were not required to disclose all of the terms of the loan. They could charge whatever they wanted and no one would know what was going on. They did not have to tell you the interest rates that you were being charged or how they calculate the interest. With the Truth in Lending Act of 1968, they were required to disclose everything. They had to tell you what interest rates you were being charged for different things and they had to do it in advance. They had to show you what everything cost along the way.

If you have ever had a credit card, you are very familiar with this procedure. It is not uncommon to receive a little brochure in the mail every few months that tell you that the company has changed their terms. It is a long booklet full of fine print that very few people actually read. However, the law states that they have to disclose all of this to you every time they change something. This puts everything out in the open and allows you to be aware of potential problems that you may have in the future. 

They have to disclose what the annual percentage rate of the card is so that you can see how much you are paying. They will sometimes also show you this in a daily periodic rate as well. They are also required to show you any fees that you are paying along the way. If you have a maintenance fee to keep the account open or anything like that, they have to show you that in plain writing, by law. 

Standardization

In addition to disclosure, the act was also designed to standardize everything about the way credit card companies present their charges to you. They all have to calculate everything the same way and show it to you in the same manner. This creates a standardized industry so that every consumer can understand things regardless of what credit company they use. 

This act was designed to help protect consumers in a number of different ways. Even though we tend to still get ourselves in trouble, at least there is a little help out there for us. 


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