News & Events
Credit Card Accountability, Responsibility, and Disclosure (CARD)
In case you haven’t heard, the Senate just passed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 by a 90-5 vote. The House passed their own version of this bill, known as the Credit Cardholders’ Bill of Rights, back in April by a 357-70 margin. It’s now up to the House and Senate to settle their differences and then send it on to the White House for the President’s signature.
What follows is a rundown of some of the key provisions that are included in this legislation. Wherever possible, I’ve tried to indicate how the House and Senate versions differ.
Rate increases: Both the House and Senate versions ban interest rate increases on existing balances unless the account is more than 30 (House) or 60 (Senate) days delinquent. Also, according to the House version, promotional rates must last a minimum of six months.
Payments: All payments above the minimum are required to be applied to the portion of your balance with the highest interest rate.
Punitive rates: According to the Senate version, if you pay late and your rate gets increased, you have the right to go back down to the original rate if you pay on time for six consecutive months.
Universal default: Both the House and Senate versions ban universal default, wherein card issuers can raise your rates if you have a late payment to a different creditor. Note that several issuers have already stopped this practice.
Notification: Card issuers have to send your bills at least 21 days before the due date. They also have to give you 45 days notice before increasing your rates, fees, or finance charges. Under the House version, card issuers are required to give you 30 days notice before they close your account.
Over limit fees: Card issuers can only charge over limit fees if you opt in for approval of over-the-limit charges. If not, your charge won’t go through, but you also won’t get hit with a fee.
Age restrictions: The House version limits issuers from extending credit to those under the age of 18 and also limits college students to a single card with the credit limit being governed by the students income. The Senate version goes further, requiring those under the age of 21 to have a cosigner or otherwise provide proof of income.
Fees: Issuers cannot charge fees to pay by mail, phone, and electronic transfer or online, except for expedited service.
Gift cards: According to the Senate bill, gift cards can’t expire in less than five years. The House bill doesn’t mention gift cards.
Note that many of these regulations overlap with new rules put in place by the Federal Reserve. However, the Fed’s rules won’t kick in until July 2010.