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Your Rights Under the Credit Card Act

Credit CARD Act of 2009

Since 2009, according to the Credit Card Accountability, Responsibility, and Disclosure Act or the Credit CARD Act, American consumers have much more protection against potential credit card issuer abuses. It’s no surprise with a new fee or a rate increase without prior notice because it needs upfront pricing. Your payment’s due date cannot be adjusted at will. You can close your account without incurring any fees if the terms alter in a way that you don’t feel.

The above mentioned may all be true, however there is a lot more to it. As an individual who’s using a credit card, you must be aware of your rights under the credit card act and the changes that it has made.

Credit Card Accountability, Responsibility, and Disclosure Act

your rights under the credit card actThe 111th Congress passed the Credit Card Accountability Responsibility and Disclosure Act of 2009 (also referred to as the Credit CARD Act of 2009) and President Obama signed it into law on May 22, 2009, amending the Truth in Lending Act.

The Credit CARD Act of 2009 is a consumer protection law that was passed to safeguard consumers from unfair operations by credit card issuers. This is accomplished by requiring more transparency in the terms and conditions of credit cards and by imposing caps on the fees and interest rates related to their use.

What are the Changes Brought by the Credit CARD Act?

Below are some of your rights under the Credit CARD Act:

Notice of Rate or Other Increased Fees in Advance

Users of credit card are now required to provide at least a 45-day written notice before making any significant changes, such raising interest rates or fees or finance charges. Credit card holders must be made aware of their option to decline or reject the changes.

No Increases to the Existing Balances

Except in specific circumstances, users of credit card are not permitted to increase your interest rate to an already existing balance. These circumstances include:

  • Expiration of a Promotional Interest Rate: Whether you’re thinking about getting a new credit card with a low introductory rate, read the fine print to see if it specifies whether the interest rate on any outstanding debt will increase after the promotional period ends and what that rate would be.
  • If your Credit Card’s Interest Rate is Variable: The rate will be determined by a formula, like the prime lending rate added to a set percentage, if you use this type of credit card.
  • Completion or Cancellation of a Hardship Program: The increase in interest rate cannot be more than it was before to the program’s start. The rate that would apply if the program was finished or canceled also had to have been disclosed to you ahead of time.
  • Having a minimum credit card payment that is more than 60 days overdue: You must be notified if your interest rate rises as a result of late payments. After that, if you complete your minimum payments on time, the card issuer must review your payment history every six months to see if you qualify for a much lower interest rate.

New Accounts Won’t Have Any Increases

Your card issuer can’t increase your interest rate for a new credit card account during the initial 12 months, except for the circumstances mentioned above.

Increases Need to Be Reviewed Twice a Year

Every six months following an interest rate increase, the credit card company should reevaluate the account to see if the rate can be minimized. The card issuer must reduce the interest rate if the original causes of the increase have changed.

Ban on Universal Default

A clause on credit card agreements known as “universal default” gave the card issuer the power to increase your interest rate whenever it saw fit. For instance, some issuers employed this clause to impose the penalty rate if one of their clients neglected to make a timely payment on another credit card. This practice is banned by the Credit CARD Act.

Payments Have to Be Processed the Same Day They Are Received

On the day of the due date, any payment made by 5 pm is regarded as on time. Your monthly payment deadline should fall on the same day. Your payment should be handled the following business day without incurring any late payment fees if your payment deadline occurs on a holiday, the weekend, or any day your card issuer does not take payments.

Any payments received in a local branch should also be processed on the same day if the card issuer takes payments there.

Payments Above Minimums Must Be Applied Fairly

With the exception of balances with deferred interest, payments over the minimum must be applied to the balance with the highest interest rate first, then the balance with the following highest interest rate. In the final two billing cycles of the promotion, the entire amount will be applied to any deferred interest balance you may have.

You Should Have Time to Make Payment During the Grace Period

Your statement has to be mailed or given to you at least 21 days prior to the finance charge being applied to your balance if your credit card balance includes a grace period during which you can settle the full balance without incurring a finance charge.

Time Must Be Given for Payment of the Bill

Your billing statement must be mailed by the credit card issuer at least 21 days before it is due. If you are granted less time, you cannot be penalized for being late.

Statements Having Penalties and Deadlines Included

The billing statement for credit accounts with late fees must specify the payment deadline and the total of any late fees. The billing statement must mention whether or not an overdue payment will lead in an increase in the interest rate as well as how much it will rise.

Warnings Regarding Minimum Payments Must Show on Billing Statements

The Credit CARD Act mandates that credit card issuers inform you of the entire cost of paying minimum-only payments. Your bill should clearly indicate:

  • The amount of time, in months, required to pay off the balance only if minimum payments were made monthly
  • The overall cost of paying minimum-only payments using the current interest rate
  • The amount of the required monthly payment and the overall interest and the principal you would spend over the course of 36 months to pay the balance
  • A number without a toll that you could contact for information regarding consumer credit counseling

Finance Charges with a Double Billing Cycle Are Banned

The CARD Act forbids using the double billing cycle method to determine financial charges. issuers. Additionally, interest cannot be added to sums that are already paid. Finance charges for accounts that were the subject of a billing error claim or a finance charge for a returned check are exempt from this.Interest can no longer be added to amounts from a previous payment cycle by credit card 

Limited Initial Charges for Subprime Credit Cards

A subprime credit card’s fees cannot exceed more than 25% of the credit limit in the first year. Total fees applied when a credit card is created that has a $400 credit limit are not allowed to exceed $100. This does not include over-the-limit fees, returned check, or late payment costs.

No Late Fees for Changes of the Card Issuer

 If your credit card issuer changed its payment processing procedures or mailing address and your payment was not processed as a result, you cannot be assessed a late fee. This includes payments made for up to 60 days following the effective date of these amendments.

No Fees for Payment Method

Unless you asked for an expedited payment which must be processed by a customer service agent, credit card issuers are not permitted to charge you a fee based on your chosen payment method.

Over-The-Limit Fees Require Opt-In

Consumers that owns a card must be given the option to opt into over-the-limit fees by credit card issuers. Transactions that surpass the credit limit must be declined unless cardholders have explicitly said they want them to be handled. Cardholders must be informed of the over-the-limit fee’s amount before choosing to participate. The option to opt out of over-the-limit fees is available to cardholders any time.

Restrictions on Over-the-Limit Fees

Unless you pay off your balance under the credit limit and exceed it again, or you obtain a credit limit increase and go over the new limit, an over-the-limit fee can only be levied once in a billing cycle and for a total of three straight billing cycles.

No Penalty for Cancellation Due to Card Changes

Your card issuer cannot impose additional costs for closing your account, let your account go into default, or demand that you pay the full balance right away if you choose to opt out of the credit card changes and shut your credit card account. However, the credit card issuer has the option to double your payment per month, demand that you pay off your balance in five years or maintain your current repayment plan.

To know more about your rights under the credit card act, get in touch with a Portland debt defense attorney right away!


What are Gift Cards and the CARD Act?


By mandating expiry dates and limiting fees, the CARD Act improved consumer protection when buying and using electronic cards, gift certificates, and shop gift cards.

These products cannot expire earlier than five years after the date of purchase. The card must prominently display the terms of an expiration date.

Additionally, if an electronic gift card, shop card, or gift certificate hasn’t been used in more than a year, a business cannot charge an “inactivity” or “dormancy” cost. A “dormant” card may only be subject to one cost, and each card or certificate must clearly state the terms of this penalty.

Marketing to Young Consumers

The CARD Act greatly limited the aggressive marketing by credit card corporations to youth, particularly those who are on college campuses, using targeted marketing tools like t-shirt giveaways.

On-campus or nearby credit card marketing is prohibited by the CARD Act. Any applicant under the age of 21 must either show that they have the resources and ability to pay independently or have a co-signer who is at least 21 years old.

Additionally, anyone under the age of 21 cannot get pre-approved card offers unless they consent to do so.

Effectiveness of CARD Act

The CARD Act’s requirement that a government agency conduct research on the law’s success is one of its less well-known components. The Consumer Financial Protection Bureau, which publishes its findings every two years, took over that task from the Federal Reserve and General Accounting Office, which had previously been in charge of it.

The Credit CARD Act has provided consumers with significant financial benefits, according to a separate analysis by The Social Science Research Network (SSRN). The 2013 SSRN analysis indicated that consumers would save $20.8 billion annually. The satisfaction of the customer base may be the most striking indicator of success. The J.D. Power Credit Card Satisfaction Survey assesses that on a scale of 1 to 1,000. In 2009, the year that the CARD Act was enacted, it was 709. It reached an all-time high of 802 by the year 2017.

Protect Your Rights Today!

It’s important to know your rights under the credit card act. Despite all the positive effects of the CARD Act of 2009, many advocates for consumers and small businesses feel that more needs to be done. For instance, the National Consumer Law Center wants the Consumer Financial Protection Bureau to enhance the law because it identifies flaws in it.

If legislators impose additional limits on the credit card business, only time will tell. In the meantime, you have a few choices if you believe your credit card company is not abiding by the guidelines established by the Credit CARD Act of 2009. It is a good idea to seek the legal advice of a Portland, Oregon attorney if you have concerns regarding the policies of your credit card issuer or the provisions of your cardholder agreement.

Northwest Debt Defense Law Firm offers free debt analysis to help our clients in resolving their legal issues. If you suspect that a credit card company is not abiding with the Credit CARD Act, our debt defense attorneys in the cities of Portland, Salem, and Medford in Oregon as well as Seattle, Tacoma, and Vancouver in Washington will help you formulate the solutions you need. Contact us right now!

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Portland, OR 97232, United States

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