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Summary of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009

The Senate voted today, 90-5, in favor of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009—an effort to crack down on dubious credit card industry practices that make it easy to charge consumers outrageous interest rates and make it harder to get out of debt. Now, the Senate must merge their proposed changes to the credit card industry with the similar Credit Cardholders’ Bill of Rights Act of 2009 that the House of Representatives passed in April 357-70. If the bills can be successfully joined, President Obama is expected to sign the bill into law this week.

What will these changes mean for you?

The major stipulations in the Senate’s Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 are:

  • Credit card companies cannot increase interest rates on existing credit card balances unless a customer is at least 60 days late.
  • In the event of an interest rate increase, the credit card company must revert to the original rate after the customer makes six months of on-time payments.
  • Credit card companies must give customers at least 45 days notice of any other interest rate hikes.
  • Billing statements must be mailed 21 days prior to the due date, and companies cannot charge a late fee if a payment is late due to a delay in processing.
  • A credit card company cannot raise interest rates in the first year of a customer relationship, and promotional interest rates must last at least six months.
  • Creditors must adhere to new regulations that will make it more difficult to issue credit cards to consumers under 21

On the upside, the the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 means your credit card companies won’t be able to charge you outrageous interest rates for an indefinite period of time if you’re a day late just once. Similarly, they won’t be able to hike your rates on existing balances arbitrarily.

These changes are all positive and long overdue, but I’m interested to watch and see how the credit card companies respond to them. I wouldn’t be surprised if we see credit card companies continue to clamp down on credit lines and credit card rewards, and I wonder if credit cards will start adding annual fees to cards that have otherwise been free.

What do you think? Will the CARD act help? Is it too little, too late, or will the credit card companies just find new ways to screw us?

Published or updated on May 19, 2009

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Money Under 30.

  1. Keith says:

    Actually Scott makes a good point. Banks not being able to raise rates on riskier customers, will cause banks to charge all of their customers more to maintain profitabilty.
    60 days late is way too late to charge a higher rate because the bank is calling the bad account from day 1 trying to collect their money. It costs the bank money to call delinquent customers from 1 day all the way up to 60 days. Yet “all paying” customers will have to pay for those collection calls because most 60 day accounts eventually charge off. That bad debt and the collection expense will be paid by all the other customers who pay as agreed.

    While I do think banks have taken too much, Kevin, this new law makes the “good paying” group pay more for the delinquent group. That’s not capitalism, that is more like socialism. BTW, Citi is covering their risk. BofA can give you a lower rate because you are a new customer. BofA will likely charge you fees to make up for the lower rate they gave you. All of the major banks will do it. But you did the right thing, by saying “bye bye bank” but watch those other fees.

    This legislation causes banks to charge everyone more instead of charging higher risk customers more. They may start charging fees on debit cards or in other areas.

  2. kevin h. says:

    scott you’re a fool. that’s capitalism ripping you off, not socialism. eight months before the law goes into effect, Discover raised your rate only to make more money and then lied to you so you’d be mad at everyone except them.

    tammy, yes citi is dumb. i have paid off my balance in full always but i missed a payment by 3 days by accident. my rate went from 12% to 25%, but my credit score averages around 770 so bank of america was happy to give me a credit card at 9%. so long citi.

    doesn’t everyone realize credit cards make money by charging the merchants for every purchase? if you don’t use your credit card for purchases the bank makes no money off you. but if you don’t use your credit card and get rewards or cash back, you’re paying for those people who do because the merchants pass their costs on to everyone equally.

  3. Tammy says:

    In theory this is great, but those evil credit card companies are punishing current card holders by significantly increasing rates for no reason just to have inflated rates when this goes into effect. Ban Citibank. I was so happy with them until for no reason i get notice that my 7% apr is jumping to 29% apr..I have barely any balance and have always paid early..they still offer new cards at a lower rate, btu a loyal customer since 1985 gets teh shaft. Close those loopholes!

  4. Scott says:

    I just received my Discover today and the rate went from 8.9% t 15.74. I have a balance of about $5800.00. When I called to ask them if they could do anything about it, the only thing they could do was give me a 6 mo. 0% on new purchases. Yeah, like thats going to happen. They told me the reason for this was as of June 1 Congress passed this new Bill that prohibits them from charging higher rates to the deadbeats so they have to “spread the wealth”. Socialism at its best! Thank you Obama from me ripping me off. And a big thank you from all of the dead beats who over charge and dont pay their bills on time

  5. Grant says:

    I’ve heard a rumor that the “grace period” will no longer exist. That is, even if you pay off your card every month, you’ll be charged interest on a daily basis for every dollar on the card. Guess we’ll just have to wait and see.

    I, for one, would most likely start using my credit card significantly less if subject to interest charges, and just use my (free) debit card, except for online purchases (and others where I want the consumer protection of a credit card.)

    The credit card companies are not going to take a hit in their profits. They will find other, new ways to make their profits, such as less valuable rewards programs, higher interest rates for everyone, and more annual fees.

  6. Lakita says:

    This is great! Though I’m worried that creditors will start increasing rates before this goes into effect! Glad mine are almost all paid off!!!

    Matt Jabs (DebtFreeAdventure) just yesterday wrote about how his rate was jacked up — the reason….poor economic conditions!!

    Wonders if the act will be grandfathered to undo abusive practices?

    Thanks for the info!

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