What The Credit CARD Act Of 2009 Means For You Now

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Many retail consumers and credit card holders are just now learning about the Credit CARD Act of 2009 and what that means for them. According to U.S. News, the law was created with more transparent disclosures in mind. The law helps protect credit card holders from any surprising or unwarranted fees while also making it a little bit easier to pay off credit card debt.

Back in 2009, then President Barack Obama signed into law the Credit CARD Act. The full title of the law is actually the Public Law 111-24, or the Credit Card Accountability Responsibility and Disclosure Act of 2009. It helps, but credit card companies take responsibility for what a lot of critics would call deceitful and abusive practices by not disclosing unexpected fees, costs, penalties and so on.

Some of the key provisions from the act included giving consumers enough time to pay their bills. In other words, credit cards should give their customers at least 21 days to pay from the time that they receive their bill or statement.

In addition, the law makes sure that credit cards do not issue any retroactive rate increases and if they do, they must give at least 45-day notice. Credit card companies are also being urged to make it easier for millions of Americans to pay down their debt by applying payment amounts to the consumer’s highest interest rate balance first.

What’s more, companies are encouraged to cancel or completely eliminate fee harvester cards (which restricts fees on low balance cards that are given to consumers with bad credit) or put excessive fees on gift cards and prepaid cards.

The law also eliminates excessive marketing to young people, or those with very little experience when it comes to maintaining and paying a credit card. If you are under the age of 21, you must prove that you have a legitimate source of income. If not, then applicants must get a co-signer before applying for a credit card. This prevents companies from sending credit card offers or applications to the high school graduate or the college-aged and bound crowd who might not have the maturity or responsibility that it takes to use a credit card wisely.

According to a press release, 8 out of 10 Americans still want more to be done though. Nearly 10 years after the CARD act started, a survey of Americans shows that people still aren't thrilled with how credit card companies operate.

"The passage of the Credit CARD Act was an earthquake in the world of credit cards, but the vast majority of Americans say more still needs to be done," Matt Schulz, Chief Industry Analyst for CompareCards said. "What they want more than anything is a cap on just how high credit card interest rates can go. That's understandable, given that Americans have never owed more on their credit cards than they do today. With all that debt, any reduction in rates would be welcome news."

Key findings of the study show:

  • 79  percent of people agreed there should be more laws and/or regulations put in place to protect credit cardholders, while just 6 percent disagreed. Even 77 percent of Republicans agreed.

  • 88 percent said there should be a cap on the interest rates financial institutions can charge on a credit card. Those with the lowest incomes are least likely to support a cap, while those with the highest incomes are most likely to support.

  • Nearly half of Americans (47 percent) said they had never heard of the CARD Act when asked whether the Credit CARD Act of 2009 had a positive or negative effect on consumers. Of those who were aware of it, 40 percent said it had a positive effect, while just 15 percent said it was a negative and 45 percent said neither.

  • Seventy percent said someone under the age of 21 be required to show proof of income or have a co-signer to get a credit card – and the older you are, the more likely you are to agree.

  • Nearly 1 in 4 (24 percent) said if someone is 60 days late with a payment on one credit card, the issuers of that person's other credit cards should be able to raise the interest rates on those cards as the result of that late payment.

As parents it's vital we understand finances because it's more than just our comfort and life on the line.

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