Credit Card Laws

The Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit CARD Act of 2009 is a federal statute passed by the United States Congress on May 22, 2009. It is comprehensive credit card reform legislation that aims "...to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."

The law includes several provisions aimed at limiting how credit card companies can charge consumers. Some of the provisions include:

 Cardholders deserve protections against arbitrary interest rate increases.

  • Requires card companies must give cardholders 45 days notice of any interest rate increases.
  • Gives cardholders the right to cancel their card and pay off their existing balance at the existing interest rate and repayment schedule if an interest rate increase is imposed.

 Cardholders should be protected from due date gimmicks.

  • Gives cardholders time to pay their bills by requiring card companies to mail billing statements 21 calendar days before the due date.
  • Requires the due date to fall on the same day each month.

 Cardholders deserve the right to set limits on their credit.

  • Requires card companies to offer consumers the option of having a fixed credit limit that cannot be exceeded.
  • Prevents card companies from charging over-the-limit fees on a cardholder with a fixed credit limit.

 Minimum payment explanation

  • Requires creditors to print on their statements the payment it would take the debtor to pay off the debt in three years, how much the debtor would pay in interest combined and the difference if the debtor was to pay only the minimum payment.

 Limits credit cards to teens

  • A credit card cannot be issued to someone under age 21, unless they have a co-signer (who is 21 or over), or can provide proof of a means to repay.

 College bank curtailment

  • Requires banks to provide a reason for participating on college campuses and at university-themed events.
  • Outlaws banks giving gifts or any promotional items (such as coupons for free pizza) to entice students to take on debt by signing with their credit cards.

The Federal Reserve Board provides two informational handouts to help you understand the new credit card laws:

What You Need to Know: New Credit Card Rules

What You Need to Know: New Credit Card Rules Effective Aug. 22