What is the Credit Card Act of 2009?

The Credit CARD Act of 2009, was signed by President Barack Obama on the 22^nd of May 2009. This Act was put in place to protect consumers against deceptive or unjust practices of credit card issuers.

Providing Extensive Consumer Security

Primarily created to protect consumers, this Act prohibits creditors to increase their interest rates for whatever reason they may have. The creditors may, however, increase interest rates in an event where the card owner is not able to pay his or her bills for over 60 days. If, for this reason, the issuer has increased the interest rate, they are required to review the account six months after the increase took place. If the customer has proven that he can pay on time, his APR can return to the previous rate.

In connection to interest rates, they should not be added within the first 12 months of card ownership. Most companies have promotional rates, which have to remain for at least six months. If there are significant changes within the conditions that the consumer agreed upon, the issuer should provide notice 45 days before the modifications are applied.

Fees for going beyond the credit limit are no longer allowed except when the customer agrees to undergo such restriction to get accepted for a credit card account. Credit card bills are required to be sent at least 21 days before reaching the payment due date. If the customer pays by 5 PM on the arranged date, the creditor should consider it as an on-time payment.

Looking After Young Customers

Before the CARD Act came into effect on February 22, 2010, individuals who reached 18 years old were allowed to get a credit card. When the law was passed, no one under the age of 21 is allowed to have a credit card. An exception is made for those that have income proof that meets the debt repayment plan. If not, there should be an adult cosigner. If a college student is an authorized user on their parent’s joint credit card account, they should acquire permission from the adult to increase the credit limit.

Better Disclosures for Consumers

Creditors are required to let consumers know how long it would take for them to pay off the balances if they only pay the minimum payments monthly. The total interest and major rates should also be disclosed to the consumers who pay the minimum bills. Postmark date and deadlines should clearly be revealed to the customers as well.

Permission to Decline

Consumers are given the right to refuse changes in the terms of their credit card account. For instance, if there is an increase in the interest rate, the consumer can choose to opt out. This means that he or she may not make purchases with the card. However, the previous interest rate will be used as the consumer pays off the remaining balance. As mentioned, anytime there is an impending change in the agreement, the customer should receive a notice 45 days before the change. The letter of notification should clearly state the steps to take in opting out of the amendment.