Credit CARD Act of 2009

Credit cards are a fact of life more many consumers. With the current credit squeeze, many credit card companies have recently been resorting to unfair fees and excessive interest rates to keep consumers in debt. On May 22, 2009, President Obama signed into law the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the Credit CARD Act of 2009). This bill was enacted to protect consumers, and especially young consumers, from skyrocketing credit card debt, unfair credit practices, and deceptive credit offers.

This Credit CARD Act requires that credit card companies notify cardholders in writing at least 45 days prior to any change in the annual percentage rate (APR). The notification must also inform cardholders that they have the right to cancel the account before the effective date of the rate increase. If a cardholder cancels the acccount, the cancellation cannot be considered a default on the account, and cannot trigger an obligation to repay the amount in full.

Other highlighted features of the Credit CARD Act of 2009 include:

If different APR's apply to separate portions of an outstanding balance, the amount of any payment beyond the minimum payment due must be applied to the portion of the balance with the highest APR.

If the payment due date is a date when a creditor does not receive or accept payments by mail (weekends and holidays), the creditor cannot treat a payment received on the next business date as a late payment.

Credit card companies are prohibited from charging a cardholder an over-the-limit fee unless the cardholder authorizes the credit card company to complete the transaction that causes the balance to go over the limit (opt-in).

Credit card companies are prohibited from charging a feee based on the manner in which a payment is made (online, by telephone, etc).

Extension of credit to consumers under age 21 is prohibited, unless the consumer demonstrates the independent means of repaying the debt or has a cosigner over 21 capable of repaying the debt.

These rules will take effect on July 1, 2010.