The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 is a federal statute in the US. It is intended to safeguard customers from some unfair credit card practices. Here are some important provisions of the CARD Act:
Interest Rate Increases
Credit card companies must notify customers regarding interest-related actions 45 days prior. This applies to raising interest rates on outstanding balances. They cannot raise interest rates on existing accounts. The expiration of a promotional rate and the variable rate linked to an index are considered.
Penalty Fees
The CARD Act restricts penalties for late payments and other breaches. Issuers may only charge fair fees. These costs must be specified in the credit card agreement. Penalty fees cannot exceed a certain threshold. Issuers are not allowed to charge several penalty fees for the same violation.
Payment Allocation
Issuers must apply the excess payment to the balance with the highest interest rate first. This prohibits issuers from applying payments in a manner that maximizes their interest rates.
Minimum Payment Disclosures
Credit card statements must reflect detailed payment information. This includes how long it will take to pay off the balance with only minimum payments and the total cost of the balance.
US Credit Card Act Exceptions
Some credit cards are exempt from specific CARD Act provisions. The credit card types below follow different regulations.
- Business credit cards
- Prepaid cards
- Some retail store cards
The CARD Act aimed to improve transparency, fairness, and accountability in the credit card business. This is to give customers better protection against unlawful conduct. It has had a big influence on how credit card issuers operate. Thus, consumer advocacy organizations are happy about these changes. Since the implementation of the credit card act, there had been more accountability, which safeguarded credit card users from deceptive tactics and potential fraud.
