Credit card laws establish consumer and creditor responsibilities and obligations, often with a focus on protecting consumers. Laws vary by country, such as New Zealand’s Credit Contracts and Consumer Finance Act and Australia’s National Consumer Credit Protection Act. In the US, the Credit Card Liability and Disclosure Act aims to protect consumers and includes requirements for billing notifications, payment application, and plain language statements.
A credit card is a plastic card that stipulates that the person to whom it was issued can charge bills for which the person agrees to pay at a later date, including interest, depending on when payment is made. Credit card laws are laws that establish the responsibilities of consumers and the obligations of those offering credit. Often, aspects of legislation are explicitly created to protect consumers. Credit card laws can be separate legislation or included in consumer credit management legislation as a whole. Legislation relating to credit practices is often national, but the European Union also has credit laws covering all member countries.
In New Zealand, the law that covers credit agreements between consumers and businesses is called the Credit Contracts and Consumer Finance Act 2003. Like similar laws elsewhere, New Zealand law covers what consumers and creditors can, can and they must do to honor the terms of their relationship. The law establishes the consumer’s rights before signing a credit agreement and afterwards. It dictates what sellers and lenders must tell consumers, when they must say it, and what must be specified in a contract. It also specifies how consumers can get help.
In Australia, the National Consumer Credit Protection Act was passed in October 2009, with reforms taking effect on 1 July 2010. An amendment called the National Consumer Credit Protection Act 2010 was passed in February 2010 With this legislation, the Australian Securities & Investments Commission (ASIC) becomes the agency responsible for overseeing consumer credit regulation across Australia, including credit cards. New credit card laws require anyone wishing to engage in certain credit activities to register with ASIC and then obtain an Australian credit licence. The law also includes disclosure of responsible lending conduct, consumer remedies and enforcement information.
In the United States, credit card laws are often separate from other regulations. A credit card law called the Credit Card Liability, Liability and Disclosure Act (CARD) was signed into law in May 2009 and went into effect in early 2010. Like other credit card laws in other countries , this law aims at consumer protection, among other objectives.
Significant changes in new US credit card legislation include requiring billing notifications at least 21 days before expiration and requiring payments to be applied to the balance with the highest interest rates first. The new legislation also mandates the use of “plain language in plain sight” on all statements. Additionally, consumers need to be told how long it will take them to pay off their balance if they pay only the minimum amount due.
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