“THE CREDIT CARD ACCOUNTABILITY RESPONSIBILITY AND DISCLOSURE ACT” The CARD Act of 2009
May 19, 2009
Prevents Unfair Increases in Interest Rates and Changes in Terms • Prohibits arbitrary interest rate increases and universal default on existing balances; • Requires a credit card issuer who increases a cardholder’s interest rate to periodically review and decrease the rate if indicated by the review;
• Prohibits credit card issuers from increasing rates on a cardholder in the first year after a credit card account is opened;
• Requires promotional rates to last at least 6 months.
Prohibits Exorbitant and Unnecessary Fees
• Prohibits issuers from charging a fee to pay a credit card debt, whether by mail, telephone, or electronic transfer, except for live services to make expedited payments; • Prohibits issuers from charging over‐limit fees unless the cardholder elects to allow the issuer to complete over‐limit transactions, and also limits over‐limit fees on electing cardholders; • Requires penalty fees to be reasonable and proportional to the omission or violation; • Enhances protections against excessive fees on low‐credit, high‐fee credit cards.
Requires Fairness in Application and Timing of Card Payments • Requires payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;
• Prohibits issuers from setting early morning deadlines for credit card payments; • Requires credit card statements to be mailed 21 days before the bill is due rather than the current 14.
Protects the Rights of Financially Responsible Credit Card Users • Prohibits interest charges on debt paid on time (double‐cycle billing ban); • Prohibits late fees if the card issuer delayed crediting the payment; • Requires that payment at local branches be credited same‐day; •...