Credit CARD Act of 2009

Most provisions in the Credit CARD Act of 2009 were effective February 22, 2010. The reform legislation, signed by President Obama in May 2009, place new restrictions on credit card fees and interest rate policies:

• Creditors must provide you with a written notice 45 days prior to increasing interest rates or making significant changes to other terms (for example, your account fees). Exceptions:
  • The interest rate varies with an index
  • The interest rate is an introductory rate (six months minimum expiration)
  • You fail to comply with the credit card terms
• Creditors must provide you with information about your right to cancel the credit card before an increase in interest rate or change to any terms go into effect. You can “opt out” of any interest rate increase and continue to pay off your balance at the current rate for up to five years, though you’re not able to charge anything more to that card.
• Creditors may not increase interest rates on your outstanding balances (interest rate increases only apply to new balances).
• Creditors must disclose, on each periodic statement, the due date and the late payment fee and penalty rate that may apply if the payment is receive after that date.
• Creditors must disclose a “Minimum Payment Warning”, on each periodic statement, stating that making the minimum payment will increase the interest you pay and the time it takes to repay your balance.
• Creditors may not charge a fee for making a payment except for payments involving an expedited service by a service representative of the creditor (for example, if you call to make a payment via phone on the actual due date).
• Creditors may not open a credit card account or increase a credit limit without considering your ability to make the required payments under the terms of the account.
• Creditors may not grant you credit if you are under 21 years of age, unless you have a co-signer or have submitted evidence of your ability to make the payments.