Your rights as a consumer - Find Me a Card

Your rights as a consumer

In 2009, a federal law was passed (the 2009 CARD Act) that significantly reformed the credit card industry and eliminated many misleading, unfair, and deceptively-complex practices. In this article, we'll summarize the most important pieces of the 2009 CARD ACT legislation as they relate to your rights as a credit card customer or prospective customer.

Summary of the 2009 CARD Act

The 2009 CARD Act (a.k.a. "Credit Card Accountability, Responsibility, and Disclosure Act") resulted in many benefits for the consumer, mostly related to prohibiting unfair changes in terms, increasing disclosure/transparency, eliminating excessive fees, and prohibiting unfair practices in regards to card payments.

The law itself is lengthy and extensive, but listed below are some of the changes and protections that it put in place.

It prohibits unfair changes in terms and arbitrary interest rate increases, essentially eliminating "Bait & Switch" tactics.

  • It sets the minimum length of time for an introductory rate at 6 months.
  • It prevents card issuers from raising your rates within the first year, with few exceptions. (The only exceptions to this rule occur when your card is a variable rate card or you are more than 60 days late on your bill. If you signed up for an introductory rate card, your cardholder can also hike your rate in less than 12 months.)
  • It requires card issuers who increase interest rates to conduct periodic reviews of your account, and to decrease the rate when warranted.

It requires more disclosure and transparency in credit card terms and conditions.

  • You must be notified 45 days in advance of any finance charge, interest rate, and/or fee increase.
  • When terms change, this must be disclosed when you renew your card.
  • Your card issuer is required to provide you with individual account information, including how long it will take to pay off your card balance and how much interest you will pay if you make only minimum monthly payments.
  • It sought to make credit card terms more readable by expanding on the "Schumer Box" that provided basic account terms in a simple grid, and demanding more detailed disclosure of terms and conditions on credit card applications and card statements.
  • It demands the use of plain and clear language in a visible format, mandating the size and font presented on applications, notices, and statements.

It seeks to eliminate unnecessary and excessive fees.

  • It prevents your card issuer from charging you a fee for paying your credit card statement by mail, phone, or electronic transfer, unless you're making an expedited payment via live services.
  • It add protections against exorbitant fees on low-credit-line, high-fee cards.
  • It regulates penalty fees, requiring them to be equitable and in proportion to the violation or oversight.
  • Your credit card company has to decline your purchase if it will take you over your credit limit, but you can override this rule and authorize your card company to approve such charges. If you go over the limit, you can only be charged one over-the-limit fee per billing cycle.
  • Fees can't total more than 25 percent of your initial credit limit, and your card company can't charge you fees based on how you pay your bill.

It prohibits unfair practices in regards to card payments.

  • Card issuers are prohibited from setting early morning deadlines for your card payment due date.
  • It extended the timeframe for mailing out your credit card statement from 14 days to 21 days.
  • When you pay more than the minimum required, your card issuer must first apply this excess payment amount to the credit card balance with the highest APR.

Other rights:

  • In addition to the rights listed above, you also have a fundamental right to close your card account, to dispute purchases you didn't make, and to report abusive practices to the Federal Trade Commission.
  • You generally also have a right to sue your credit card company. (But note: If you signed an arbitration agreement when you signed up for the card, you might have relinquished that right.)