Credit Card Laws: Your Rights on Charges, Billing, and Rates

Federal credit card laws give you a defined set of rights whenever you apply for a card, use one, dispute a charge, or fall behind on payments. Your liability for fraud is capped at $50 and is usually $0 in practice, your issuer must investigate billing errors on a strict clock, your interest rate cannot be raised on balances you already owe, and debt collectors face tight limits on how they can contact you. The rules come mainly from the Truth in Lending Act, the Credit CARD Act of 2009, the Equal Credit Opportunity Act, and the Fair Debt Collection Practices Act, and they apply to every issuer and collector operating in the United States.

Your Liability for Unauthorized Charges

If someone uses your credit card without permission, federal law caps what you can be forced to pay at $50. That ceiling only applies to charges made before you tell the issuer the card was lost or stolen. Anything charged after you report it is the issuer’s loss, not yours. And if you report the card missing before any fraudulent charges post, you owe nothing at all.¹

The $50 figure is the legal maximum. Every major card network and most issuers run a voluntary zero-liability policy on top of the statute, so most cardholders pay nothing on fraud claims.

The cap covers “unauthorized use,” meaning a transaction by someone who had no permission to use the card and from which you got no benefit. A card number stolen and used online by a stranger is the clean case. Lending your card to a friend who then overspends is harder to characterize as unauthorized.¹

Disputing a Billing Error

A “billing error” covers charges for items you never received, amounts that are wrong, unauthorized transactions, and payments the issuer failed to credit properly. To get the legal protections running, you have to send a written dispute to your issuer within 60 days of the date it sent the statement showing the error. Send it to the address the issuer designates for billing inquiries, not the payment address. Include your name, account number, the disputed amount, and why you believe it is wrong.²

Once the issuer receives your notice, it must acknowledge the dispute in writing within 30 days. It then has to finish the investigation and either fix the error or explain why the bill is correct within two full billing cycles, and never more than 90 days.²

While the investigation is open, you can withhold payment on the disputed amount and any related finance charges. You still have to pay the rest of the bill. If the issuer finds an error, it corrects the account and reverses related finance charges. If it decides the charge was valid, it owes you a written explanation and supporting documentation on request. An issuer that misses the deadlines forfeits the right to collect the first $50 of the disputed amount even if the charge was legitimate.

Disputes Over Defective Goods or Services

A separate rule lets you raise complaints about the quality of what you bought with the card issuer, not just the merchant. If you paid by credit card and the product was defective, never delivered, or not as described, you can assert those same claims against the issuer that you could against the seller.

Three conditions apply. You have to make a good-faith effort to resolve the problem with the merchant first. The purchase must be more than $50. And the transaction must have occurred in the same state where you live or within 100 miles of your billing address.³

The dollar and geographic limits fall away when the issuer is the merchant, when the issuer controls the merchant, or when you placed the order through a mail or online solicitation the issuer participated in. That last exception sweeps in a large share of purchases made through issuer-affiliated shopping portals. The most you can recover this way is whatever balance remains on that specific transaction when you first notify the issuer.³

Limits on Interest Rate Increases

Your card issuer cannot raise the annual percentage rate on balances you have already accumulated. If you owe $3,000 at 18% and the issuer wants to move you to 24%, the new rate applies only to purchases from that point forward. The existing $3,000 stays at the old rate.⁴

There is one significant exception. If you fall more than 60 days behind on your minimum payment, the issuer can impose a penalty rate on your entire balance, including old debt. Even then, if you make every minimum payment on time for the next six months, the issuer must end the penalty rate. Missing a payment by just over 60 days can temporarily double your interest cost, but the law gives you a defined path back to the original rate.⁴

Any rate increase on future purchases, or other significant change to your account terms, requires at least 45 days’ written notice before it takes effect. The same notice rule applies to fee and finance charge increases.⁵

Interest can only be calculated on balances in the current billing cycle. Double-cycle billing, where issuers reached back to charge interest on amounts you already paid off in the previous cycle, is prohibited.⁶

Payment Timing and Fee Caps

Your issuer must credit payments as of the date received. It can set a cutoff time for what counts as same-day, but the cutoff cannot be earlier than 5:00 p.m. on the due date. If you pay in person at a branch, the issuer must accept the payment until the branch closes, even past 5:00 p.m.⁷

Due dates must fall on the same day each month. Your statement has to go out at least 21 days before the due date. If the issuer misses that window, it cannot treat your payment as late.

Late fees must be “reasonable and proportional” to the cost the issuer bears from a late payment. Regulations set safe harbor dollar amounts adjusted annually for inflation; issuers can charge up to that amount without proving actual costs. The late fee can never exceed the missed minimum payment itself. If your minimum was $25, the late fee cannot be $35.⁸

Over-limit fees require your opt-in. Without it, the issuer cannot charge you a fee for exceeding your credit limit. Even after you opt in, the issuer is limited to one over-limit fee per billing cycle and can only charge fees for up to three consecutive cycles arising from the same over-limit event. You can revoke the opt-in at any time.⁹

Ability to Pay and Rules for Applicants Under 21

Before opening a new account or raising your credit limit, the issuer must evaluate your ability to make at least the minimum payments based on your income or assets and your existing obligations. Income for this purpose includes wages, salary, tips, retirement benefits, public assistance, and investment income, from full-time, part-time, or self-employment. The issuer can also consider credit reports and scores.¹⁰

If you are under 21, an issuer cannot open an account for you unless you can show an independent ability to make the required minimum payments, or you have a cosigner at least 21 years old who agrees to be liable for the debt. Credit limit increases before you turn 21 require either that you still independently qualify or, if you got the card with a cosigner, that the cosigner agree in writing to the additional liability.¹¹

Issuers also cannot offer gifts or other incentives to students to apply for a card on a college campus, within 1,000 feet of a campus, or at a college-sponsored event.

Protection Against Credit Discrimination

The Equal Credit Opportunity Act makes it illegal for any creditor, including card issuers, to discriminate against you based on race, color, religion, national origin, sex, marital status, or age. Issuers also cannot penalize you because your income comes from public assistance or because you exercised rights under consumer credit laws.¹²

If you are denied a card or have your terms changed unfavorably, the issuer must send you a written notice within 30 days. That notice must include either the specific reasons for the decision or instructions for requesting them.¹³

Rules for Debt Collectors

Once a credit card debt is turned over to a third-party collector, the Fair Debt Collection Practices Act governs the collector’s conduct. It generally does not cover the original card issuer collecting its own debt.

Collectors face strict limits on contact:

No calls before 8:00 a.m. or after 9:00 p.m. in your local time zone.
No calls to your workplace once the collector knows or has reason to know your employer prohibits personal calls there.
No threats of violence, no misrepresentation of the amount owed, and no lying about the legal consequences of not paying.

¹⁴

Demanding Verification of the Debt

Within five days of first contacting you, a collector must send a written notice with the amount owed, the name of the creditor, and a statement of your right to dispute the debt. If you send a written dispute within 30 days of receiving that notice, the collector must stop all collection activity until it provides verification. If it cannot prove you owe the money, it has no business asking for it.¹⁵

Cutting Off Contact

You can send a written notice telling a collector to stop contacting you altogether. After receiving it, the collector must cease communication except to confirm it is stopping, to tell you it may pursue a specific legal remedy, or to say it intends to take a particular action such as filing suit.¹⁶

Cutting off contact does not erase the debt. The collector can still sue you, and the statute of limitations on credit card debt, which typically runs three to six years depending on where you live, keeps running. What the cease-communication letter does is shift the dynamic: instead of repeated calls, the collector has to decide whether the debt is worth pursuing in court.

How to Enforce Your Rights

If a card issuer or collector violates any of these rules, you can file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov/complaint. The CFPB forwards the complaint to the company, which generally has 15 days to respond and up to 60 days for complex issues. Complaint data is public, which gives companies real incentive to resolve problems quickly.¹⁷

For violations of the Fair Debt Collection Practices Act, you can sue the collector in state or federal court within one year of the violation. A successful claim can produce actual damages plus up to $1,000 in statutory damages per case, and the collector may have to pay your attorney’s fees. For billing dispute violations under the Truth in Lending Act, the issuer can be held liable for twice the finance charge, subject to minimum and maximum caps, plus attorney’s fees. You do not have to rely on a government agency alone to enforce these rights.

1
Office of the Law Revision Counsel. 15 U.S. Code 1643 – Liability of Holder of Credit Card
2
Office of the Law Revision Counsel. 15 U.S. Code 1666 – Correction of Billing Errors
3
Office of the Law Revision Counsel. 15 USC 1666i – Assertion of Claims and Defenses
4
Office of the Law Revision Counsel. 15 U.S. Code 1666i-1 – Limits on Interest Rate, Fee, and Finance Charge Increases
5
Federal Trade Commission. Public Law 111-24 – Credit Card Accountability Responsibility and Disclosure Act of 2009
6
Office of the Law Revision Counsel. 15 U.S. Code 1637 – Open End Consumer Credit Plans
7
eCFR. 12 CFR 1026.10 – Payments
8
eCFR. 12 CFR 1026.52 – Limitations on Fees
9
eCFR. 12 CFR 1026.56 – Requirements for Over-the-Limit Transactions
10
Consumer Financial Protection Bureau. 12 CFR 1026.51 – Ability to Pay
11
eCFR. 12 CFR 1026.51 – Ability to Pay
12
Office of the Law Revision Counsel. 15 USC 1691 – Scope of Prohibition
13
Consumer Financial Protection Bureau. 12 CFR 1002.9 – Notifications
14
Consumer Financial Protection Bureau. When and How Often Can a Debt Collector Call Me on the Phone?
15
Office of the Law Revision Counsel. 15 U.S. Code 1692g – Validation of Debts
16
Office of the Law Revision Counsel. 15 USC 1692c – Communication in Connection With Debt Collection
17
Consumer Financial Protection Bureau. Submit a Complaint