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

A set of blocks spelling out the word "disclosure" with coins in the background noting how the Act encourages transparency for consumers.

The recently signed Credit Card Accountability Responsibility Disclosure Act of 2009, also called the Credit Cardholder’ Bill of Rights, makes many changes to the way credit cards are regulated.


The following is an overview of the law as it is written; please check out our glossary if you have any questions about any of the credit card terms used in this article.

Most of the provisions take effect 9 months after the bill is signed, around the end of February, 2010. The new rules about notifying consumers 45 days in advance of any change in interest rate take effect at the end of August, 2009.

Your credit card company must notify you 45 days in advance of any change of your interest rate.

Universal Default is now prohibited.

Two-cycle billing is now restricted.

Your creditor can only raise your rate according to clearly disclosed conditions.

Creditors can only close your account after providing 30 days’ notice.

Creditors can only raise your rate under specific circumstances:

  • If your rate is tied to a national rate that varies, like the Fed’s Prime Rate
  • If they previously disclosed to you that your current rate is only temporary (in which case the introductory rate must last for at least six months)
  • If you are 60 days late on your payments
  • For new credit card accounts, the rate can only be raised after a year has passed
  • If you have balances with different APRs (for example, if part of your balance is due to a cash advance and part is from purchases), any amount you pay over the minimum must be applied to the balance with the higher APR first

Creditors must send you a credit card statement at least 21 days before your payment is due.

Creditors must post the text of their credit card agreements on the web.

Creditors may not charge an extra fee for consumers to make payments by web or by phone, unless you are making a payment on the day it is due or on the day before and need expedited service.

You can only go over your credit card’s spending limit (and incur over limit fees) if you “opt in” to allow over limit transactions on your account.

Creditors are required to provide details about how long it will take to pay off a balance if you only make the minimum payment required, and how much interest will accrue during that time.

The fees a creditor may charge in connection to a “sub-prime” credit card are restricted.

Many fees on Gift Cards and Stored Value Cards have been banned, and gift cards cannot expire in less than five years.

No one under 18 may be approved for a credit card, unless they are fully emancipated under the law. They may be added to their parent’s accounts.

Adults under 21 may not get a credit limit greater than $500 or 20% of their annual income, and college students may not be offered incentives to sign up for a credit card.

There are more provisions in the law, including a review of the government’s financial literacy education efforts.

While these new provisions will help the typical consumer avoid traps and unfair fees and rate hikes, it is likely that credit will be more expensive for everyone. Many analysts expect annual fees for using credit cards to become the norm. Also, people with poor or no credit history will find it more difficult to gain access to credit card accounts under these new restrictions.

As much as the Credit CARD Act of 2009 helps consumers get fair treatment from creditors, it makes it more important than ever to pay down existing credit card debt to manageable levels and to maintain a healthy credit rating.

Now that they are bound by these new rules, creditors will be looking for customers with the best possible credit before they offer credit cards. Read our “Consumer Guide To Good Credit” (available here as a free .pdf download) to learn ways to ensure your credit report and score are accurate and reflect positively on you.

Article written by
Melinda Opperman
Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined in 2003 and has over two decades of experience in the industry.

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