By Ryan C .Wood
The Credit Card Accountability and Disclosure Act (CARD Act) was passed in 2009 to protect consumers from abusive credit card issuers. One of the driving forces providing bankruptcy attorneys more clients is overwhelming credit card debt. Here’s how some of the laws will affect you.
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You Will Receive Notice of Rate Changes
The CARD Act prohibits credit card issuers from arbitrarily increasing your APR without 45 days notice and applying rate increases to existing credit card balances. The credit card issuers must also provide you with notice and the right to cancel your credit card and pay off the existing balance if the interest rate increases. The Act will also prevent a credit card issuer from increasing the rates in the first year after a credit card has been opened and requires promotional rates to last at least 6 months.
You Will not be Penalized for Making Timely Payments
The CARD Act prevents credit card issuers from charging interest on debts that are paid on time, otherwise known as “double-cycle” billing. It also requires credit card issuers to credit payments made at a local branch store immediately to your account, and it prevents credit card issuers from charging late fees if they delayed crediting payments made. If your rate increased, but you have been making payments on-time for at least 6 months, credit card issuers are required to review your account and return to your interest rate to the interest rate prior to the increase. If you make payments in excess of the minimum payment, the excess amount will be applied towards your debt with the highest interest rate first.
Your Payment Due Date Will be the Same Every Month
Your payment will be due by 5:00 p.m. EST on the same day every month, and if this date lands on a weekend or holiday, the due date will be pushed back to the next business day. Credit card issuers are also required to provide you with notice regarding penalties and late fees they will charge if you are late. In addition, credit card issuers are required to mail out credit card statements at least 21 days prior to the payment due date.
Prevents You From Paying Unfair Fees
The CARD Act prohibits credit card issuers from charging a fee for taking payments, either by phone, mail, online, etc. except in instances where you receive live in-person service to make expedited payments. It also prohibits credit card issuers from charging over-the-limit fees unless you “opt-in” for the credit card issuers to complete over-the-limit transactions. The fees charged by the credit card issuers must be reasonable and proportional to the violation, and it protects you from excessive fees on low-limit, high fee credit cards.
You will Receive More Detailed Information from Credit Card Issuers
Your credit card issuer will need to include more information on your credit card bill, including: 1) if you only make minimum payments, how long will it take for you to pay off your debt, and how much total interest you would have paid, 2) how much you would need to pay per month if you wanted to retire your debt in three years, how much total interest you would have paid, and 3) the difference between 1) and 2).
You will be Protected Against Misleading Terms
The CARD Act prevents credit card issuers from using terms such as “fixed rate” and “prime rate” in a misleading manner by providing set definitions to those terms. Credit Card issuers also must use a minimum font size for their statements to provide you with better readability. You also have an opportunity to reject any pre-approved credit card up until the moment of activating the card.
Strengthens Oversight of the Credit Card Industry
The CARD Act requires credit card issuers to post the credit card agreements on their website, and to provide their agreements to the Federal Reserve Board to post on their website. It also requires the Federal Reserve Board to review the consumer credit card market and allows the Federal Trade Commission powers to make rules preventing deceptive marketing of free credit reports.
Younger People will be Safeguarded from the Credit Card Issuers
Credit cards will not be issued to anyone under 21 years of age unless they have a co-signer over 21 and limits the amount of prescreened offers to younger people. The CARD Act also requires banks to provide a reason to participate on college campuses and university-themed events. The CARD Act prohibits banks from giving out promotional material to entice consumers into taking on debt by signing with their credit cards.
You will Receive Gift Card Protection
The CARD Act requires a minimum of a five year lifespan on gift cards issued. Credit card issuers are prohibited from charging hidden fees and declining values on gift cards unless the gift card has been inactive for at least 12 months. If fees are charged after this period, it must be clearly stated on the gift card, and credit card issuers cannot charge more than one fee per month under any circumstances.
The above benefits are a summary only! As with most laws, there are many rules and exceptions. Please consult with an attorney if you need legal advice. We have bankruptcy attorneys ready and available to help you, with offices in Oakland, San Francisco, San Jose, and Redwood City for your convenience.