Introduced and passed during the Obama administration, the Credit Card Accountability Responsibility and Disclosure Act of 2009, also known the CARD Act, introduced a number of protections for credit card users. This was in response to previous widespread abuses and deceptive practices by credit card issuers.
Prohibited acts included arbitrary interest rate hikes, marketing to underage consumers, excessive fees and disclosure obfuscations. While the Act did level the playing field somewhat, issuers still have quite a bit of leeway in certain areas. Here are some of your rights under the Credit CARD Act of 2009.
Interest Rate Hikes
Issuers are now required to provide 45 days notice before implementing an interest rate increase, or any other major change in the terms of the account. Further, increases can only be triggered by certain circumstances. These include when a promotional rate ends, the agreed-upon rate is variable, or a cardholder makes a late payment.
Universal Default Limitations
In the past, if you had problems repaying one of your other creditors, an issuer could raise your rate on their card, even if it’s unrelated to the account with which you had a problem. The CARD Act eliminated this on existing balances. However, it can still be applied to new purchases—with 45 days notice.
Minimum Payment Disclosures
Your statement must include notifications regarding the consequences of making minimum payments. They have to disclose how many months it will take to pay off the balance at that rate. Card issuers must also divulge the total cost of repaying the loan if you’re only making minimum payments. The monthly payment required to pay off the balance in three year must be told as well. Additionally, Issuers are required to provide a toll-free number to get information about credit counseling. Speaking of which, if you find you’re having trouble making minimum credit card payments, a company like Freedom Debt Relief can help you find a workable solution too.
Applicants must be 21 years of age or older, unless they can provide proof of income sufficient to support the credit limit attached to the card. Marketing on college campuses with free gifts for signing up is prohibited.
If issuers change terms and you don’t agree with the changes, you have the right to close the account and pay it off over five years with no penalties—under the terms that were in place just before the change.
All payments must be processed the day they are received. Further, the due date must be the same each month. If a due date falls on a holiday, the payment must be processed on the first business day afterwards—with no penalties applied. Any payment arriving at or before 5:00 P.M. at the designated office must be considered on time. If payments are also accepted at a local office, they must be applied the day they are made there.
Application of Payments
Any payment amount over the minimum must be applied to the highest interest rate balance first. If a balance has deferred interest, the entire payment goes toward it in the last two billing cycles of the promotion.
Free Credit Report Disclosures
Ads offering copies of your credit report must disclose the fact that you are entitled to one free copy of your report each year at AnnualCreditReport.com. They must also state their offer is not the free reported mandated by law.
This is a partial listing of the protections afforded to you. You’ll find a full listing of your rights under the Credit CATD Act of 2009 at the Consumer Financial Protection Bureau (CFPB) website.