The Credit Card Accountability Responsibility and Disclosure Act of 2009 (The Credit CARD Act of 2009) is a new group of federal laws that are designed to make credit card practices more fair and transparent. It has several major provisions that will affect the many Americans who use credit cards.
- Requires companies to give consumers 45 days notice of changes to their interest rates, allows consumers to close the card and pay off the balance at the old interest rate, and prevents companies from changing individual customer's interest rates for reasons unrelated to that particular account.
- Requires companies to apply payments (in excess of minimum payments) to the higher interest portions of a balance that has multiple interest rates.
- Prevents companies from using a previous month's balance to calculate the present month's interest charges (often called double-cycle billing.)
- Requires companies to allow at least 21 days between the statement mailing date and the payment due date, and requires that payments received by 5 pm on the due date be counted as received on the due date. It also prevents the companies for charging a fee to process telephone or internet transactions, unless it is immediately before the due date. Payments made at a local branch must be posted the same day as the payment is made.
- Allows consumers to request that the companies deny transactions that would put their account over their credit limit, and prevents companies from charging any over-limit fees to customers who opt for such strict credit limitations. In the event that a customer does not request the strict credit limitations, the company is limited to three over-limit charges for each incidence that the customer exceeds their credit limit.
- Young adults, under the age of 21, will be required to show proof of income or have a co-signer in order to obtain credit cards.
- Substantially limits the fees and charges of sub-prime credit cards, which are often marketed to customers with low credit scores and/or little credit history.