Understanding the Fair Credit Billing Act: What It Is and How It Protects Your Credit Rights

Jasmine Trespecio
Jul 3
3 min read

If you've ever found an error on your credit card bill—like a charge you didn’t make or a duplicate transaction—you might have felt powerless. Fortunately, the Fair Credit Billing Act (FCBA) exists to protect you. This important consumer protection law ensures you're not left footing the bill for mistakes or fraud, and it plays a key role in safeguarding your credit.

What Is the Fair Credit Billing Act (FCBA)?

The Fair Credit Billing Act is a federal law enacted in 1974 that protects consumers from unfair billing practices and provides a way to dispute inaccurate credit card charges. It applies to open-end credit accounts, such as credit cards and revolving charge accounts (like department store accounts).

Key Protections Under FCBA:

Disputing Errors: You can dispute unauthorized charges, billing errors, and goods or services you never received.
Timely Resolution: Creditors must respond to your dispute within 30 days, and resolve it within 90 days.
Limited Liability: If your credit card is lost or stolen, your liability is limited to $50—and if you report it before it's used, you owe nothing.
Withholding Payment: You can withhold payment on faulty goods or services if you bought them with a credit card and tried to resolve the issue with the seller.

How to Use the FCBA to Your Advantage

To take full advantage of the FCBA, you need to act quickly and correctly. Here’s how:

Identify the error: Look for incorrect charges, math errors, or charges for items you didn’t receive.
Send a written notice: Mail a dispute letter to the creditor’s “billing inquiries” address within 60 days of the bill date.
Include key details: Explain the error, include your name and account number, and enclose a copy of the bill with the issue highlighted.
Withhold payment on the disputed amount: You don’t have to pay the disputed charge while it’s being investigated—but you do need to pay the rest of your bill.

How Does FCBA Help Your Credit Score?

While the FCBA doesn’t directly improve your credit score, it helps prevent damage by:

Avoiding wrongful negative marks: Billing errors that go unresolved could result in missed payments or increased balances, both of which hurt your score.
Keeping utilization in check: If an error inflates your balance, your credit utilization ratio could spike, negatively impacting your score. Disputing errors helps maintain accuracy.
Preventing collection actions: If an error goes unchallenged, it might go to collections—which can severely hurt your credit score.

Know Your Rights

The FCBA gives you a clear voice in how creditors treat your billing disputes. You're not obligated to pay for mistakes, and creditors cannot threaten your credit just because you disputed a charge in good faith.

Here’s what you’re entitled to:

A prompt investigation of your complaint.
Suspension of the disputed charge while it's being resolved.
Written notice of the outcome.

What FCBA Doesn’t Cover:

Debit card transactions (those are covered by the Electronic Fund Transfer Act).
Installment loans (like auto loans or mortgages).
Disputes that are submitted too late (after 60 days from the bill date).

The Fair Credit Billing Act is a vital tool in your financial toolkit. By understanding and using it, you can prevent billing errors from wrecking your budget—or your credit score. It’s a reminder that as a consumer, you have rights, and knowing them is the first step toward financial empowerment.