Credit Card Accountability, Responsibility, and Disclosure Act (CARD)
The Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit CARD Act of 2009 was passed by the United States Congress and signed by President Barack Obama on May 22, 2009. It is comprehensive credit card reform legislation that aims "...to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."
Key features include:
• Protections against arbitrary interest rate increases
• Elimination of penalties on cardholders who pay on time
• Clarification of due dates
• Protections from misleading terms
• Cardholders have right to set limits on their credit
• Card companies must fairly credit and allocate payments
• Prevents card companies from imposing excessive fees on cardholders
• Better Congressional oversight of the credit card industry
• Limits credit cards to teens
Cry Wolf Quotes
ABA is very concerned about the direction this legislation is headed and we are concerned over the impact it will have on the ability of consumers, students and small businesses to get credit cards.
“As an industry leader, Chase does not engage in several practices -- universal default, two-cycle billing and increasing a rate based on a change in a credit score -- addressed by the bill, but we believe the legislation as passed today has the potential of increasing overall costs to consumers, reducing access to credit, and reducing or eliminating low-rate options for consumers.”
This bill fundamentally changes the entire business model of credit cards by restricting the ability to price credit for risk. It is a fundamental rule of lending that an increase in risk means that less credit will be available and that the credit that is available will often have a higher interest rate.
I think that every single company that offers a credit card is reassessing its cost….reassessing what they do and how they do it.
Evidence
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Banking Lobby's Warnings About CARD Act Disproven
What happened after credit card reform bill passed Congress in 2009 (it worked).
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The Successes of the CARD Act
The Consumer Financial Protection Bureau describes exactly what the act did and what the effects were one year later.
Backgrounders & Briefs
A Timeline of the CARD Act
An interactive timeline of credit card reform.
