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Credit CARD Act (Credit Cardholders’ Bill of Rights Act of 2009)

This article was written by in Credit. 9 comments.


The following timeline and details will be updated as the Credit Cardholders’ Bill of Rights, now merged with and known as the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, progresses through Congress and as the bill makes its way to the President to be signed into law. Visit this article often for the latest information and to read the current versions of the bills as they are amended, voted upon, and revised.

Credit Cardholders’ Bill of Rights Reverse Timeline

August 22, 2010: The Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 is fully in effect for existing and new credit card accounts.
February 22, 2010: Some provisions of the Credit CARD Act go into effect today, particularly rules for new credit card accounts.
May 22, 2009: President Obama signs the Credit Card Act of 2009 (which has been merged with the Cardholders’ Bill of Rights), H.R.627, and the new regulations will begin to take effect starting in February 2010.
May 20, 2009: The House of Representatives agrees to the Senate’s version of H.R.627 and sends the bill to the President to sign.
May 19, 2009: The Senate passes H.R.627 with a vote of 90 to 5.
May 12, 2009: The bipartisan Senate Banking Committee has agreed on the Credit CARD Act of 2009 (S.414).
May 11, 2009: The Senate proposed an amendment to the Credit CARD Act (H.R.627) as passed by the House of Representatives.
April 30, 2009: The House passes H.R.627 with a bipartisan vote of 357 to 70.
February 11, 2009: S.414 is introduced in the Senate
January 22, 2009: H.R.627 is introduced in the House.
January 14, 2009: The Credit Cardholders’ Bill of Rights (S.235) is introduced in the Senate.

Credit Cardholders’ Bill of Rights Details

On April 30, 2009, the House of Representatives passed a bill commonly called the Credit Cardholders’ Bill of Rights Act of 2009. This bill goes a long way to end some deceprive practices used by credit card companies to lure and trap consumers into expensive debt. While many of the problems resulting from these practices can be avoided by using credit wisely or not at all and adjusting your expectations to assume that the companies only care about their bottom line, not their customers, not all the blame can be placed on the consumer.

Thus, the government is stepping in with this effort to protect credit card users from practices such as abrupt rate increases, retroactive rate increases, and double-cycle billing, a situation in which customers are charged interest even after the last monthly bill to include charges for spending is fully paid off.

Here are some interesting points included in the House version of the bill.

  • Credit card issuers will be required to maintain low introductory rates for at least six months.
  • Issuers must warn consumers if they are spending close to their credit limit, allowing them to avoid a penalty.
  • Issuers cannot charge customers a fee for paying their bill over the phone or online.

The changes to credit card regulations will begin taking effect in February 2010. When President Obama signed the bill into a law on May 22, 2009, he reminded the public about the importance of personal responsibility:

So we’re not going to give people a free pass; we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives.

A similar bill passed the house last year but did not get much further.

Read the current version of the Credit CARD Act of 2009 (formerly Credit Cardholders’ Bill of Rights), H.R.627, as presented by the Congress to the President (May 20, 2009)

The following are older versions of related bills:

Read the Senate’s Credit CARD Act of 2009, S.414 (February 11, 2009)

Read the Senate’s Credit Cardholders’ Bill of Rights, S.235 (January 14, 2009)

U.S. House acts to protect credit card users, Reuters, April 30, 2009

Updated March 31, 2011 and originally published April 30, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 9 comments… read them below or add one }

avatar Jennifer

I don’t trust the government, so I have to wonder who this really benefits. I think it’s a bad idea to assume that credit card companies will have to be honest and operate with integrity simply because there’s a bill that passed. Consumers still need to take responsibility for their finances and their actions when applying for and using a credit card. Don’t expect the government to fix this for you.

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avatar SJ

Hrm yay consumers can work on auto pilot now -_-

So when are they going to pass the credit cardholders bill of responsibility ?

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avatar Jimmy

Assuming this bill becomes law, it effectively puts my company (primarily a sub-prime credit card company) and about 1,500 of my fellow coworkers out of business. Not only that, but our entire customer base (millions of people) will no longer have any access to credit. Providing credit to those with less than perfect credit histories will no longer be profitable, yet it will entail the same risk and that is not a sustainable business model.

Before you wish us good riddance, I can ensure you that we’ve always treated our customers fairly and have gone above and beyond all government mandated compliance. Consumers, you are shooting yourselves in the foot by supporting this piece of legislation.

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avatar Luke Landes ♦127,470 (Platinum)

Jimmy: The bill doesn’t outlaw sub-prime credit card companies, it only restricts certain practices. No credit card company’s survival relies on double-cycle billing and no-warning rate increases — even sub-prime lenders. If you’ve treated customers fairly — and I believe you when you say you have — then you have little to fear with this legislation.

There is one piece of the legislation that refers directly to sub-prime credit issuers that restricts certain fees only after an initial fee is charged that is more than 25% of the available credit limit. I’m sure sub-prime credit companies will survive this legislation; or, if one does not survive, that it will have little to do with the legislation. Credit card companies are practiced in finding ways to make money off consumers regardless of the circumstances.

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avatar Julie

If a consumer is such a bad credit risk that jacking their rates through the roof is the only way to make money off of them, it would be much better for them if they weren’t extended credit at all.

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avatar Kyle

I think we need some more restrictions on credit card companies but I don’t know that you can outlaw charging for payments over the phone. A lot of these companies are using a third party service to handle the ACH payment, like BillMatrix. They charge the company a fee which is then passed on to the consumer. Are they going to make postage free as well, it already costs you 42 cents to mail your payment in…

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avatar Holly

So sad that the cc companies are worried about their exorbitant profit margins! I have an 820 credit score, yet when I paid my cc balance in full only ONE DAY LATE–which was the first time I have ever been late paying ANY bill EVER(I was late due to the fact that I was in the middle of a mortgage refinance and misread the cc’s due date)– the cc charged a $39 late fee, changed my rate from 7.9% to 23.9%, and charged interest based on the 23.9% rate! After I called them, they agreed to change the rate to 14.9% (still way too high for an outstanding customer of 14 years). I’d hate to see what they’d do to those poor suckers w/credit score in the 600 range! They are all bottom-dwellers.

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avatar Andy

While this may seem great on the face of it, companies will pass on these extra costs to consumers via credit card annual fees, tigher rules and more fees. All bad and will limit credit when the economy needs it the most. Be careful what you wish for President Obama. The consequences could be dire.

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avatar Linda Ferrrari

Hi Holly. I can tell you exactly what they do to consumers with low credit scores — make more money! Last year consumers spent $28 billion on higher interest rates and penalty fees due to low credit scores. Can you imagine how much is going to be paid in higher interest rates and fees this year due to the economic crisis? And the bill doesn’t go into effect for yet another year.

As an expert in the area of credit, I could not be happier about this new legislation, however, as an expert I also know that it’s only the beginning of what needs to be addressed in this area. I appreciate sites like this keeping consumers involved and aware.

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