CARD Act of 2009

The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 is a landmark piece of legislation enacted in the United States to address and curb abusive practices by credit card companies. Signed into law by President Barack Obama, it provides significant protections for consumers against unfair fees, deceptive interest rates adjustments, and other exploitative behaviors. The Act was fully implemented in February 2010.

Interest Rate Increases

The CARD Act restricts credit card issuers from increasing interest rates on existing balances unless the consumer:

• Is more than 60 days late on payments.
• Is on an introductory or promotional APR that has ended.
• Experiencing a significant change in indexed interest rates.

Disclosure and Billing Practices

The legislation mandates transparency in billing and disclosures, stipulating that issuers must:

• Send statements 21 days before the payment due date.
• Provide clear and noticeable warnings about the costs of making only minimum payments.

Fee Restrictions

The Act places limitations on fees, including:

• Prohibition of over-limit fees unless the consumer has opted into over-limit transactions.
• Restrictions on the frequency and amount of late fees.

Underage Protections

The CARD Act includes protections for young consumers by:

• Requiring co-signers for applicants under 21 years of age unless they can demonstrate a means of repaying the debt.
• Ensuring marketing practices on college campuses are regulated.

Examples of Consumer Protections

• A consumer will not see sudden, unannounced increases in interest rates on their existing credit card debt.
• Clearer breakdowns of fees and interest charges on monthly statements, making it easier for consumers to understand their financial obligations.
• Fewer unexpected fees, promoting fairer treatment and greater financial stability for cardholders.

Applicability

The CARD Act applies to all credit card issuers operating within the United States, covering a wide range of credit card practices. Consumers of all demographics benefit from its provisions, especially younger adults who are new to credit.

Related Terms

• APR (Annual Percentage Rate): The annual rate charged for borrowing or earned through an investment.
• Grace Period: A period after the due date during which no late fees will be charged.
• Minimum Payment: The lowest amount a consumer must pay to keep their account in good standing.
• Credit Utilization Ratio: The ratio of a cardholder’s credit card balances to credit limits.

FAQs