Card Protectionn Act
Signed by President Obama on May 22, 2009, the Credit Card Protection Act, simply known as the Credit CARD Act of
2009, aims to improve transparency among credit card companies, banks, and end-users.
Sponsored by Rep. Carolyn Maloney of New York, it was introduced on January 22, 2009 to the House of
Representatives as H.R. 627 and was passed on the 30th of April, and eventually, the Senate on the 19th of May.
The complete title of the Credit Card Protection Act is Credit Card Accountability Responsibility
and Disclosure Act of 2009. In a nutshell, it aims to limit unjust interest rate increases, charges, and penalties
by credit card issuers and also forbids them from intentionally issuing credit cards to minors or those below 18.
The Credit Card Protection Act also demands for the extensive information dissemination by creditors to the
consumers with regard to changes or developments in their accounts. Companies are also required to inform consumers
properly of their means of communication and counseling services they may offer. The Credit Card Protection Act
even obligates the public and the Federal Reserve Board to Congress to be transparent on matters concerning the
general condition of the consumer market.
According to major consumer groups, cardholders can get a lot of benefits from the Credit Card Protection Act since
it can prevent them from sinking deeper into the debt trap. Here are some pro-consumer features of the Credit Card
Protection Act. Retroactive rate increases on existing balances by card issuers will not be allowed unless a
promotional rate expired or the variable indexed rate increased. This increase should also not be applied unless
the cardholder is in a delinquent status (meaning, s/he has paid late by 60 days or more).
According to the Credit Card Protection Act, cardholders should also be notified of any changes in the contract
such as rate increases 45 days before they are imposed. One limitation to this feature of the Credit Card
Protection Act is changes on credit limits. The issuer has the right to slash a credit limit without notification.
This situation can only happen if the reduction will not trigger some sort of a penalty fee.
The Credit Card Protection Act also prohibits card issuers from charging over the limit fees unless cardholders
allow the companies to approve over the limit transactions. Basically, with the Credit Card Protection Act, card
issuers and banks cannot charge cardholders a fee to pay their bills. This can be applied to payments made online
or over the phone. Transaction charges for these payments methods should have been eliminated by card issuers by
The new Credit Card Protection Act also bans double-cycle billing by card issuers and requires them to
apply above-minimum payments to the credit card balance with the highest interest rate first. The law also demands
companies to send billing statements 21 days prior to the due date. As an added protection to gift card owners, the
Credit Card Protection Act of 2009 also requires gift cards to expire after least five years.
Source: Credit Cards For People With Bad Credit Rating
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