Highlights of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009

Arizona PIRG

As of August 20, 2009:

Requires 45-day notice of adverse changes in terms. Requires banks to mail statements at least 21 days in advance of due dates. Requires notice of right to cancel when new terms unacceptable.

As of February 20, 2010:

For students and young people:

Protects young people from unfair marketing of credit cards by requiring any consumer between 18-21 to show an ability to repay or have a co-signer before obtaining a card. Bans requiring students who stop at on-campus tables to fill out an application as a condition of obtaining any free gift such as a free lunch, coffee mug, T-shirt or other trinket. Requires colleges and credit card companies with financial relationships for college-branded credit cards to publicly disclose contracts.
 
For all consumers:

Bans hair trigger rate increases for late payments: No increased interest rates generally allowed on existing balances for any late payment, unless customer 60 days late. Prohibits late fees for bills due on Sunday or holiday that arrive the next day or that arrive at any time before 5 p.m. on any due date local time.

Bans raising rates due to late payment to other creditors (universal default clause) in the first year of any card contract, for both existing and future balances. Bans universal default permanently on existing (previous) balances.

Requires payments to accounts with balances at multiple interest rates to be allocated more favorably to the higher interest rate balances (current practice is to apply full payment to lowest rate). Bans certain practices – such as double-cycle billing) designed to collect interest on amounts already paid in previous months.

Gives FTC greater authority over deceptive marketing of “free-to-pay” offers for products such as credit monitoring.

Provides new protections for purchasers of pre-paid gift cards.

Restricts over-the-limit transactions. Many credit card companies allowed consumers to go over their credit limits, then charged excessive and repeat overlimit fees. Now, you’ll need to tell your credit card company — opt-in — that you want it to allow transactions that will take you over your credit limit. Otherwise, over-limit transactions may be turned down, but if allowed anyway, they cannot charge you an over-the-limit fee. If you do agree to allow over-limit transactions, your credit card company can impose only one fee per billing cycle. You can revoke your opt-in at any time.

Links and information to protect consumers

•    To opt-out by law of receiving credit card offers by mail or phone:
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre17.shtm 

•    To obtain your free annual credit report from each of three free credit reporting agencies (and avoid deceptive offers such as freecreditreport.com):
http://www.ftc.gov/freereports. You are not required to pay extra for any credit score or to “sign up” for any trial offers” to use these rights. In some states you have the right to an additional free credit report annually from each firm, but you must use different procedures, usually by using a phone tree at the credit reporting agency. Under state law, consumers in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont have access to a second free credit report annually.

•    File a complaint about your credit card company with the Office of the Comptroller of the Currency, which regulates all the big credit card companies: http://occ.gov/customer.htm. Note: skip the unhelpful “help with my bank” link, and instead look at the section “OCC CAG” – which explains how to contact the agency’s “Customer Assistance Group.”

•    What young adults should know about credit cards:
http://cdn.publicinterestnetwork.org/assets/FHJZ22uLZU6sl0vnGutmnw/Credit_Card_Booklet.pdf

•    Federal Reserve Board fact sheet on new law: http://www.federalreserve.gov/consumerinfo/wyntk/creditcardrules.htm