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For every credit card sin, even minor ones, there used to be fire-and-brimstone consequences from the issuer. The Credit Card Accountability Responsibility and Disclosure Act of 2009, also known as the Card Act, changed that.
After passing with strong bipartisan support in the House and Senate, the Card Act was signed into law in May 2009 by President Barack Obama. If you've made a late payment on a credit card since the law passed, or if you maxed out a card — or even if you've ever carried a balance! — you can thank the consumer protections in the law. Without them, those actions might have cost you a lot more.
In this article
The impact of the Card Act
The Card Act reduced “gotcha” credit card fees by more than $16 billion in the years after it passed, according to estimates from the Consumer Financial Protection Bureau, the agency tasked with enforcing the law. In a 2015 report, the bureau noted some positive changes for consumers since the law was implemented:
Average late fees assessed are now $27, down from $35 before the Card Act.
Over-limit fees have mostly disappeared.
Issuers rarely "reprice" accounts anymore — that is, they generally don't increase interest rates on both new and existing balances because of a cardholder's infraction on one account or another.
Still, the Card Act hasn’t escaped criticism. The American Bankers Association says the law has driven up credit card interest rates and annual fees. The ABA also blames the law for shrinking credit lines and making credit less available, especially for subprime borrowers, young people and immigrants. On the flip side, some consumer advocates say the law doesn't go far enough in stamping out harmful issuer practices.
What the Card Act covers
In broad terms, the Card Act curtails certain credit card charges, protects young consumers and makes the true cost of credit more transparent. It also restricts fees on gift cards and nonreloadable prepaid cards. Here are some of its most notable protections:
What the Card Act doesn’t cover
Shortly after the Card Act became law, one subprime credit card issuer started offering a card with an annual percentage rate of 79.9%. As it happens, that's still legal. The Card Act limits how issuers can increase interest rates on existing accounts, but the interest rates themselves are still governed by state laws.
Among other limitations, the law also doesn't protect you from certain fees or interest rate increases. It also applies only to consumer credit cards — not business credit cards.
What to do if your issuer breaks the rules
If you think your rights under the Card Act are being violated and your issuer isn't responding to your complaints, lodge a complaint with the CFPB. The bureau will work on your behalf to get a resolution.