The Credit Card Accountability Responsibility and Disclosure Act of 2009
created important new protections for credit card users. The new law requires
that credit card companies provide cardholders with clear and understandable
forms and statements; establishes rules regarding rate increases; and provides
special protections for students and young people.
Five Key Protections:
Credit card companies are limited in how they can change the terms
of your agreement without your permission.
• If your credit card company wants
to increase your rate, the increase will apply only to new purchases
after the new rate takes effect. Your credit card company must notify you
about the change 45 days before the new rate takes effect, and give you the
option of closing your account and paying off your existing balance at your
current interest rate.
• Your credit card company
can change the rates on existing balances without notifying you only
you are more than 60 days late paying your credit card bill
you have a clearly advertised promotional rate that is expiring
you have a variable rate credit card
you failed to comply with the terms of a “workout” or “hardship”
agreement you reached with the company
Your credit card company may ask you to “opt in” to coverage for
purchases that go over your credit limit. This means that your
credit card company will authorize a purchase that will put you over your
credit limit, but they will charge you a fee. Often, the credit card company
will continue to charge fees as long as your credit card balance remains over
the limit. If you don't “opt in” to this coverage, the credit card company is
not allowed to charge you fees for allowing you to exceed your credit
Your credit card company cannot charge you to make payments by
telephone, electronically, or by mail. Your bill cannot be due on a weekend or
holidays, and the cutoff time for on-time payments cannot be in the middle of
Your credit card statement will include better information about
how long it will take to pay off your debt and the consequences for late
• Every statement will include a
clear due date, the date on which your payment would be 60 days delinquent,
and the penalty interest rate and fees that would apply for paying
• Your statement will also tell you
how long it would take to pay off your balance if you only make minimum
payments, and how much you would have to pay each month to pay off the balance
in three years.
Attention: young adults. You must demonstrate you can repay your
credit card debt before you get a credit card.
• A credit card company cannot issue
a card to a person under the age of 21 unless he or she has an independent
source of income or a cosigner.
• Individuals age 21 or younger
should no longer receive pre-approved or pre-screened solicitations in the
mail, and cannot be offered giveaways (like Frisbees or T-shirts) for opening
a credit card account.