Credit CARD Act of 2009: A Consumer's Guide

The Credit CARD Act of 2009 was a significant piece of legislation that aimed to protect consumers from unfair credit card practices. It was signed into law by President Barack Obama on May 22, 2009.

One of the key provisions of the law was that credit card companies could no longer increase interest rates on existing balances unless the cardholder was more than 60 days late on a payment. This helped prevent sudden and unexpected rate hikes.

Credit card companies were also required to give cardholders 45 days' notice before making changes to the terms of the card, such as increasing interest rates or fees. This allowed consumers to review and understand the changes before they took effect.

The law also banned the practice of retroactive rate increases, which had become a common tactic used by credit card companies to raise rates on existing balances. This provision helped prevent cardholders from being surprised by sudden rate hikes.

The Credit CARD Act of 2009 introduced several key provisions that aim to protect consumers from unfair practices by credit card companies. One of the main provisions is that credit card companies must give consumers at least 21 days to pay their bills from the time the bill is mailed.

Credit card companies are also prohibited from changing their payment deadlines each month, and cannot charge late fees if the debtor shows proof of payment by close of business on the due date. If the established due date falls on a Saturday, Sunday, or legal banking holiday, the due date is pushed back to the next business day.

The Act also requires credit card companies to apply payment amounts in excess of the minimum payment amount to a consumer's highest interest rate balances first. This means that consumers will be able to pay off their debt faster and save on interest charges.

Here are some key provisions of the CARD Act in a nutshell:

The CARD Act also prohibits credit card companies from mailing offers to consumers under 21 unless they "opt in", and prohibits companies from wooing students with free gifts at university-sponsored events. This provision aims to protect young adults from excessive marketing and debt.

The Credit CARD Act of 2009 brought about significant changes to the way credit card companies operate, with a primary focus on consumer protection. The act prohibits issuers from granting new accounts to anyone under 21 years of age unless they have a cosigner who is over 21 years old or enough independent income to afford the credit card payments.

One of the most notable provisions of the act is the requirement that issuers give cardholders at least 21 days to pay a bill from the date it was mailed. This ensures that cardholders have sufficient time to make their payments and avoid late fees.

Issuers can no longer increase interest rates on a customer's account at any time without warning. They must wait until an account is at least 12 months old before raising its APR, and they must provide notice 45 days in advance.

The act also restricts the fees that can be charged to consumers. For example, late payment fees are capped, and issuers must provide notice before charging over-limit fees.

The CARD Act requires credit card companies to disclose long-range terms for their accounts, including the period of time and total interest charged for someone to pay off the card if they only make the minimum monthly payment.

Here are some key provisions of the Credit CARD Act:

The CARD Act has made the language, terms, and disclosure of penalties and fees much more transparent, both in the initial card agreements and in monthly statements. This transparency helps consumers make informed decisions about their credit card usage.

The CARD Act of 2009 has had a significant impact on consumers. It essentially eliminated over-the-limit penalties, saving consumers $9 billion in a 3-year span from 2011-2014.

The average late fee dropped from $33.08 in 2008 to $26.84 in 2012, resulting in $1.5 billion less in late fees paid by consumers.

The allowable limit for late fee payments was raised to $38 in 2017, but not all card companies went that high.

The number of accounts that had their interest rates raised decreased from 15% per year to just 2%. This change was expected to increase again as interest rates from the Federal Reserve went up.

A separate study by The Social Science Research Network (SSRN) estimated consumer savings to be $20.8 billion per year since the CARD Act was passed.

Consumer satisfaction also saw a significant boost, with the J.D. Power Credit Card Satisfaction Survey rating increasing from 709 in 2009 to 802 in 2017, an all-time high.

The Credit CARD Act of 2009 has a significant impact on merchants and financial institutions. The act's protections only apply to consumer credit cards, not business credit cards.

Merchants don't get to enjoy the benefits of the act with their own business credit cards. This leaves them vulnerable to issues like friendly fraud and other abuses of the chargeback process.

The laws around disputes and chargebacks have never been updated to address merchant concerns. This is a major oversight that affects merchants' bottom line.

Merchants are often at the mercy of consumers who take advantage of the chargeback process, causing financial losses for the merchants. This is a real-world problem that affects many businesses.

Under the CARD Act, card companies can no longer use double-cycle billing, which means they can't charge interest on both the current and previous billing cycles.

The Act also limits late payment fees to $25 for the first violation and $35 for each subsequent violation within six months, and ensures that the total late fees assessed may not exceed the minimum payment due.

You'll now receive your monthly statements at least 21 days prior to the due date, and the due date must fall on the same day every month, unless it's a weekend or holiday.

The CARD Act requires card issuers to apply any payment amounts over the minimum payment due to the balance with the highest interest rate. However, they can still choose how to apply your minimum payments.

Here are some key payment and billing practices under the CARD Act:

Double billing and late payment policies used to be a major source of frustration for credit card holders. The CARD Act has eliminated the practice of double-cycle billing, also known as double billing, which allowed credit card issuers to charge interest on both the current and previous billing cycles.

Credit card issuers can no longer charge interest on balances from previous billing cycles. If you've carried a balance and then pay your bill in full, you won't have to pay interest on debt you've already paid off.

The CARD Act limits late fees to $25 for the first violation and $35 for each subsequent violation within a six-month period. The total late fees assessed may not exceed the minimum payment due.

Late payment violations and fees were another way card companies increased profits. The CARD Act has put a stop to this practice by requiring clear disclosure of late fees and interest rate changes.

Credit card issuers must now mail or deliver statements at least 21 days before the due date. Floating due dates or due dates that change from time to time are no longer allowed.

The CARD Act requires credit card issuers to disclose how long it will take to pay off a balance if only the minimum payment is made, as well as the total amount of interest paid over the life of the debt.

Here's a summary of the changes to late payment policies:

These changes aim to provide greater transparency and fairness in credit card billing practices.

Gift cards have some pretty cool protections under the CARD Act.

Companies can't make you use your gift card within five years of buying it, and they have to clearly state the expiration date.

Inactivity fees are also limited - you can't be charged unless your card has been inactive for over a year.

If you do get charged, it can't be more than one fee, and the terms have to be clearly disclosed on the card.

The Credit CARD Act of 2009 has several provisions aimed at protecting consumers from predatory lending practices. Credit card companies must give consumers at least 21 days to pay their bills, and cannot change payment deadlines without clear notice.

The Act also limits retroactive rate increases, requiring credit card companies to give consumers at least 45 days notice before raising rates. Low introductory rates must last at least six months, and credit card companies must apply payment amounts to a consumer's highest interest rate balances first.

Credit card companies must disclose long-range terms for their accounts, including the period of time and total interest charged for paying off the card with only the minimum monthly payment. They must also clearly spell out terms and conditions, without deceptive fine print or gimmicks.

The CARD Act requires credit card companies to inform cardholders how long it will take to pay off an existing balance if they only make the minimum payment each month. This transparency helps consumers make informed decisions about their credit card usage.

Some key regulations include:

Credit card companies must disclose long-range terms for its accounts. They must spell out for a customer the period of time and total interest charged for someone to pay off the card if they only make the minimum monthly payment.

If a customer is charged an "over-the-limit" fee, the terms of this fee must be made clear ahead of time. They must opt in for this fee, and it's up to the customer to know what they're getting themselves into.

Credit card companies cannot change "over-the-limit" fees without the terms being made clear ahead of time. This means customers have a say in whether or not they want to pay these additional fees.

The CARD Act requires credit card companies to show the terms of their agreements clearly. This means no more hidden fees or fine print that's hard to read.

Here are some key provisions related to transparency:

If you think your credit card rights have been violated, contact the credit card issuer first to resolve the issue. If no resolution, file a complaint with the Consumer Financial Protection Bureau (CFPB).

Common complaints include billing, advertising, fees, interest rates, rewards, and collection problems. Each complaint is assigned a tracking number.

The CFPB investigates complaints to determine if laws were violated and action is needed. You can log in to the CFPB's complaint system to track the status of your credit card complaints using the tracking number assigned to your case.

Prior to 2011, no single regulatory agency handled consumer complaints. The CFPB quickly made its presence known by fining Capital One Bank in 2012 for pressuring and misleading two million customers.

The crackdowns have continued, with Citibank agreeing in 2018 to return $335 million.

The Credit CARD Act of 2009 has made a significant impact on the credit card industry and consumers. The act has saved consumers money and made it easier to compare credit cards.

Total credit card debt in the U.S. stands at over $1 trillion, weighing heavily on the finances of individuals. High-interest rate charges and late fees are major contributors to this burden.

The CARD Act has taken steps to mitigate this burden on consumers by limiting predatory lending practices. This legislation has helped consumers avoid more than $16 billion in gotcha credit card fees.

Here are some key statistics on the impact of the CARD Act:

The CARD Act has also made it easier for consumers to compare credit cards and make informed decisions about their financial options. This increased transparency has helped consumers save money and avoid costly mistakes.