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Your rights under federal law
TILA · 15 U.S.C. §§ 1601–1667f

The Truth in Lending Act, in plain English.

Before a lender can put you on the hook for interest and fees, federal law requires them to tell you exactly what credit will cost: in writing, in a specific format, before you sign. TILA is the law that puts numbers on those disclosures and gives you specific rights when they're wrong or missing.

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What TILA is

The Truth in Lending Act is a 1968 federal law that controls disclosures and certain practices for most consumer credit: credit cards, personal loans, installment loans, mortgages, home-equity loans, and many financing products structured as consumer credit. The core idea is simple: before a lender can charge you, they have to tell you the actual cost of borrowing in standardized terms you can compare across offers.

TILA includes the Fair Credit Billing Act (FCBA, §1666), which is your rights when there's an error on a credit-card or revolving-credit statement, and the CARD Act amendments from 2009, which added specific protections for credit-card holders. Like the FDCPA and FCRA, TILA gives you a private right to sue lenders who get the disclosures wrong, and shifts attorneys' fees to the violator.

What it gives you

Six specific rights, in plain English.

Each right is grounded in a specific section of TILA. The plain explanation comes first; the example shows what it looks like in practice.

§1638 · Required cost disclosures

The lender has to tell you the real cost of the loan, in writing, before you sign.

Before you take out most consumer loans, the lender must give you a clear written disclosure of the APR (the true annual cost of borrowing, including most fees), the finance charge (the total interest and fees in dollars), the total of payments, and the payment schedule. The disclosures have to be in a specific format that's easy to compare across offers, and they have to be delivered before you sign.

Example

You shop for a $5,000 personal loan. One lender offers "8.99% interest with a $250 origination fee." Another offers "7.99% with a $500 origination fee." TILA requires both to disclose the APR (which factors in those fees over the loan term), so you can compare them on the same number. The first might disclose 11.4% APR; the second might disclose 11.7%. Without TILA, comparing offers in apples to apples wouldn't be possible.

Or

A lender writes "low monthly payments!" but doesn't disclose the total of payments, meaning you can't see what the loan will cost over its full term. That's a §1638 violation.

§1666 · Credit-card billing errors

You have 60 days to dispute a credit-card billing error in writing.

If your credit-card statement has an error (an unauthorized charge, a charge for goods you didn't receive, a math error, a charge for the wrong amount), you have 60 days from the statement date to send the issuer a written dispute. Once they receive it, they have 30 days to acknowledge it and two billing cycles (no more than 90 days) to resolve it. They can't try to collect on the disputed amount during the investigation.

Example

A $400 charge from "ABC LLC" appears on your card statement. You don't recognize it. You write the issuer within 60 days; under §1666 they have to investigate before charging you another cent on that amount, and they can't report it as delinquent during the investigation.

Or

You ordered a $200 product that never arrived. The merchant won't refund you. You file a §1666 dispute with the card issuer. They have to investigate the dispute and reach a resolution before charging you for the undelivered goods.

§1635 · Right of rescission on home-secured loans

You can cancel certain home-secured loans within 3 days, no questions asked.

For most loans secured by your principal residence other than purchase-money mortgages (home-equity loans, HELOCs, and refinances), federal law gives you a 3-business-day right to cancel for any reason. The lender has to return any fees you paid. If they didn't give you proper notice of this right, the rescission window can extend up to three years.

Example

You sign a HELOC on a Monday. By midnight on Thursday, you can cancel for any reason: buyer's remorse, a better offer, anything. Send the rescission notice in writing within the window and the loan unwinds.

Or

The lender at closing didn't actually give you the rescission notice (or gave you an incomplete one). The 3-day window doesn't close until you receive a proper notice, sometimes years later.

CARD Act amendments · Credit-card practices

Credit-card issuers face specific rules under the CARD Act.

Congress amended TILA in 2009 (the Credit CARD Act) to add several protections specifically for credit-card holders: 45 days' advance notice before most rate increases, no rate hikes on existing balances except in narrow cases, fee caps in the first year of an account, and standardized statement formatting showing how long it would take to pay off your balance at the minimum payment.

Example

Your card issuer wants to raise your rate from 18% to 24%. They have to notify you 45 days in advance, in writing, with notice of your right to opt out and pay off the existing balance at the old rate. The new rate generally applies only to new charges going forward; the balance you already had stays at the old rate.

Or

The "Minimum Payment Warning" box on your statement: "If you make only the minimum payment, you will pay off the balance shown on this statement in 23 years and end up paying $14,372 in interest." That box is required by the CARD Act, and reading it changes how a lot of people approach minimum payments.

§1637 · Periodic statement requirements

You're entitled to clear, formatted periodic statements.

Credit-card and certain other open-end credit statements must include specific information in a standardized format: your balance, the APR, the fees and interest charged this cycle, the payment due date, the minimum payment, and the minimum-payment warning. The format and content are prescribed; lenders can't choose to leave any of it off.

Example

An issuer sends a statement that shows the balance and the minimum payment, but doesn't include the minimum-payment warning box, the late-payment warning, or a year-to-date interest summary. That's a §1637 violation.

§1640 · The right to sue

You can sue lenders whose disclosures are wrong. They pay your attorney.

When a lender violates TILA (wrong APR disclosure, missing required disclosures, late or incomplete disclosures), you can sue. Damages include actual damages, statutory damages (in some cases up to $5,000 per loan, twice the finance charge in others), and your attorneys' fees and costs. In limited circumstances, you can rescind a loan past the normal 3-day window. The fee-shifting provision is what makes these cases viable to bring.

Example

A lender disclosed a 9% APR on your personal loan, but the true APR (factoring in fees they should have included) was 14%. That's a §1640 violation. The case typically settles for the statutory damages plus your attorneys' fees, often before any litigation actually moves forward.

Looking at a loan agreement and not sure what was supposed to be disclosed? An attorney can read it with you. The first call is free.
What TILA doesn't do

It doesn't cap interest rates, and it doesn't apply to business credit.

TILA is a disclosure statute. It controls what the lender has to tell you about the cost of credit. Interest-rate caps themselves come from state usury law. (For payday loans and similar high-cost products, that distinction matters: state usury law is often the bigger lever, with TILA disclosure violations as a parallel claim.)

TILA also generally applies only to consumer credit. Loans for business purposes, agricultural credit above certain thresholds, and certain credit transactions over a high-dollar limit are excluded from most of its requirements.

What Credo does with it

We use TILA to challenge bad disclosures and to dispute billing errors, and pursue §1640 damages where the violations are clear.

TILA does the most work for us in three contexts. First, on payday and personal-loan products where the disclosures are often wrong or missing; §1640 violations become both defenses against collection and counterclaims for damages. Second, on credit-card billing-error disputes under §1666; when a charge is unauthorized, the goods didn't arrive, or the math doesn't work, the §1666 letter triggers the issuer's obligation to investigate. Third, in the rare cases where a §1635 rescission is available on a home-secured loan with bad disclosures.

For most consumer-debt matters TILA isn't the lead statute the way the FDCPA or the FCRA is, but its disclosure rules and damages framework often add leverage to a settlement that would otherwise have been on the lender's terms.

For more on the matters where TILA most often applies, see Personal & payday loans, Credit-card debt, or Medical bills.

The other federal statutes

Two other federal laws often apply alongside TILA.

FDCPA · Fair Debt Collection Practices Act
What debt collectors can and cannot do.
FCRA · Fair Credit Reporting Act
What can appear on your credit report and how to dispute it.

Want to know whether your loan's disclosures were correct?

An attorney can read the loan agreement, the statements, and the disclosures, and tell you what TILA actually required, and where the violations are. The first call is free.

Or call (212) 461-4026 · Mon–Fri 9–5 ET
Related services

Where TILA most often comes into play.

Personal & payday loans
Disclosure-violation defenses and §1640 damages.
Credit-card debt
§1666 billing-error disputes and CARD Act protections.
Medical bills
When medical financing is structured as consumer credit.
Lawsuits & summons
TILA defects often become defenses in collection suits.