The Credit Card Accountability Responsibility and Disclosure Act of 2009
Better Credit…Better Options
The Credit Card Act of 2009, also known as The Credit Card Accountability, Responsibility, and Disclosure Act, establishes transparent and fair practices when it comes to the extension of credit. It mainly deals with open end consumer credit, but also addresses other purposes. This is a federal statute and known as a comprehensive reform of credit card legislation. It was passed with bipartisan support from both the Senate and the House of Representatives.
The bill became effective in February of 2010 and includes many provisions aimed at controlling the way credit card companies can charge consumers. However, it doesn’t address rate caps, fee settings, or price controls. This act helps protect cardholders by forcing credit card companies to notify of any rate increase or any other significant change in the terms of a credit card account. They must notify the consumer 45 days before the effective date and the notice must be clear, while providing the opportunity for the consumer to close their account.
If the consumer decides they want to close their account, the credit card company can’t charge a penalty for closing the account, require you to pay the balance immediately, or place in in default. The can, however, double your minimum monthly payment or make you pay back the balance over a five-year period.
Credit card companies can increase your rate, if the original rate was clearly disclosed with a specific period of time. This comes into play with introductory interest rates, which only last for a stated amount of time before the rate increases. In addition, they can still issue variable rate cards and may raise your rate if it was lowered during a temporary hardship agreement. The only time they can retroactively raise your rate is when you’re 60 days late on your payment, but they must provide an opportunity to earn back the original rate.
For more information about The Credit Card Act of 2009, go here.
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