Consumer complaints against credit card companies prompted Congress and the Obama administration to pass the Credit Card Accountability Responsibility and Disclosure Act (CARD) of 2009. Years of widespread confusing terms and false advertising led to a bill that contains several features that protect consumers against credit card abuse.
CARD limits the number of interest rate increases credit car companies can make on existing balances. Credit card companies can only boost rates after promotions end and on contracts that include a variable interest rate. Any significant increases in a credit cardholder’s interest rate must include an advance notice of 45 days.
Since 2009, consumers have enjoyed the legal right to opt out of credit card agreements, if they reject significant changes in the terms set on their accounts. When you opt out of a credit card contract, you still have to pay off the balance under the old terms of the credit card agreement. However, CARD gives you five years to pay off the balance.
Before 2009, credit card companies used to swarm on college campuses like vultures swarm over a carcass. CARD ended the credit card company manipulation of vulnerable young adults. Credit card companies cannot issue credit cards to anyone under the age of 21, unless the young adult has an adult older than 21 co-sign the credit card agreement. CARD also imposed distance limits on credit card companies to keep the companies off college campuses.
Consumers have the legal right to opt-in to prevent over limit fees. Any credit cardholder that decides to opt-in for over limit fee protection has their credit card transactions denied, if the transactions exceed their credit limits. Moreover, fees that penalize consumers for going over credit limits cannot exceed the over charged amount.
At the core of CARD is the legal mandate to make credit card terms of agreements easier for consumers to understand. This legal mandate applies to the dates and times set forth in a credit card agreement. Credit card companies are prohibited from setting ambiguous deadlines for payments, as well as creating cutoff times before 5 p.m.on payment due dates. Late payments on holidays and weekends no longer are subject to late fees.
Credit card companies enjoyed years of double dipping on imposing finances charges. However, CARD prohibits credit card companies from calculating finances charges on previous billing cycles. Credit card companies must compute finances charges based only on the current billing cycle.
CARD requires credit card companies to inform consumers of the financial consequences of paying just the minimum amount owed each month. Credit card companies must provide consumers with information that describes how long it would take for consumers to pay off balances by sending minimum amounts owed.
Consumers receive gift card protection because of CARD. Gift cards cannot expire until five years after issuance. Companies that issue gift cards can no longer charge dormancy fees on cards consumers do not use for 12 months or more. Gift card issuers are not allowed to charge more than one monthly fee, but there is not a limit on the amount of the fee charged.
The passage of CARD issued a new era of consumer protection laws that have leveled the playing field between consumers and credit card companies. Contact a licensed consumer law attorney today if a credit card company has violated any of the statutes found in the comprehensive CARD act.