Credit Card Accountability, Responsibility, and Disclosure Act of 2010

About the CARD Act

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 was signed into law by President Barack Obama on May 22, 2009. The new credit card law – the CARD Act – made significant changes to existing credit card law and created new protections for credit card users.

The CARD Act makes significant changes to existing credit card law including regulations on interest rate increases, billing statements, over-limit charges, and payment due dates.

While most parts of the CARD Act do not go into effect until February 22, 2010, some of the law became effective on August 20, 2009.

Advance Notice of Interest Rate and Other Significant Changes

This new rule requires that the credit card issuers must provide the consumer’s with at least 45 day notice before making any major changes on the credit card terms and conditions such as increase in the interest rate. There is also no penalty for opting out.

Limits on Interest Rate Increases

This rule states how credit card companies cannot increase the interest rate on the existing balances except in certain circumstances.

Opt-In Required for Over-the-Limit Fees

This rule gives the consumer the chance to opt in for over the limit transactions or to have such transactions denied.

Application of Credit Card Payments & Payment Due Dates

This rule governs how the payment on a credit card should be processed. Payments before 5 PM should be processed the same day as well is making allowances for due dates that fall on weekends or holidays.

No More Universal Default or Double Billing Cycle Finance Charges

Universal default as well as the double billing cycle method of calculating financial charges have been banned. Universal default enabled a credit card issuer to increase interest rate when you have been late on a payment for another credit card will is double billing cycle allowed the credit card issuers to charge interest on balances from a previous billing cycle that had already been paid.

Limits on Initial Fees for Subprime Credit Cards

This rule limits as well is reduces the amount of fee that can be charged on sub-prime credit cards for the credit card issuer and also makes it mandatory for him to charge it in installments.

Minimum Payment Warnings Must Appear on Billing Statements

This rule makes it mandatory for the credit card issuers to disclose all costs of making minimum only payments on the credit card billing statement. It should reveal the amount of interest to be paid as well as the time to squint to take to repay the balance.

Billing Statements Must Include Late Payment Deadlines and Penalties

This rule makes it mandatory for the credit card issuer to include notification of what’s the late fee or charges for late payments are on the billing statement along with the exact amount. It should also include information about actions that the credit card issuer will take owing to a late payment which could include an increase in the interest rate.

Disclosure Rules for “Free” Credit Reports

This rule makes it mandatory for anyone advertising a free credit report for consumers to make it clear in their advertisements that it is not the federal free credit report they are shifting to which is available to the consumer at no cost from AnnualCreditReport.com.

Rules on Credit Cards for Young Adults

This regulation has brought about many changes on the practices that the credit card companies can use when it comes to providing teenagers under the age of 21 with credit cards.

Rules on Gift Card an Gift Certificate Fees – CARD Act 2010

This rule controls the practices of gift cards, gift certificates and prepaid credit cards pertaining to inactivity fee and expiration.

Penalties for Credit Card Issuer Violations – A credit card issuer who violates the Credit CARD Act can be fined between $500 and $5,000 for each violation.