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?

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Lakita 20 May 2009 at 10:11 am permalink

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!
Kita

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Grant 20 May 2009 at 6:23 pm permalink

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.

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Scott 13 June 2009 at 3:28 pm permalink

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

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