Credit Card 2009
Credit CARD Act SUMMARY
“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;
• Requires credit card companies to consider a
“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;
• Requires credit card companies to consider a