2008 taught us all one thing. Lenders who aren’t closely regulated can be led by greed and cause another crash. This is why the CARD Act was put into place.


What is the CARD Act?


According to investopedia.com, the CARD Act is a “federal law to protect credit card users from abusive lending practices by card issuers.”


6 Ways the CARD Act Protects You


1. Young People

If you are under 21, credit card companies can’t give you a credit card unless you can prove that you can pay back at least the minimum balance or have a co-signer on the account that can pay in the event you can’t.

Credit card companies can’t market to get your business by offering free pizza or a t-shirt if you sign up.


2. Limits on Interest Rates

There is a limit on how much you can pay on a universal default charge (meaning hiking the interest rates for all your credit cards if you are late even once). 

Interest must be calculated using the daily interest rate for that billing cycle.

If your interest rate changes, your card issuer must state the reason.

Certain circumstances can cause interest rates to increase, such as:

  • A promotional period ends
  • You have a variable interest rate credit card
  • Your hardship or special payment agreement has ended
  • Or you have late payments greater than 60 days


3. Due Dates

Due dates must fall on the same date every month.

Payments submitted after 5 pm but before 11:59 pm must be considered on time.

Due days that fall on a holiday will have until the next business day to be submitted without penalty.

Your card issuer must give you a reasonable amount of time to pay your monthly bill (at least 21 days after the statement is given).

Your late payments will not be reported to the credit bureaus unless you are 30 days late.

4. Fee Limitations

You can’t be charged over-the-limit fees if you opt out of having access to credit if you exceed your limit. The card will decline, but no fees will be charged.

If you decide you want access to credit, you will be charged a fee if you exceed the limit, but the fee cannot be more than the amount you go over.

Only one over-the-limit fee may be charged per billing cycle.

Late fees are limited to $25 unless it keeps pace with inflation or you are late more than once during six months. As of March 2023, Congress is fighting to lower this fee to $8.

Credit card companies can no longer charge you fees for having credit card inactivity.


5. Account Communication

You must be given at least a 45-day notice if your card issuer changes your interest rate, rewards, or fees to provide you with enough time to accept the changes or close your account.

Your monthly statement must include how much you will pay in principle and interest if you only pay the minimum amount monthly and how much you will need to pay to be debt free within three years.


6. Gift Cards

Must not expire five years before the date the card was issued or funds last loaded.

All fees and limitations must be written on the gift card packaging.

Allows only one inactivity fee per month if it’s not used at least once a year.


What it doesn’t protect

  1. Small Business Owners business credit cards.
  2. No protection against processing fees being charged before a card is activated.
  3. No protection against deferred interest that card issuers can charge retroactive interest if you are late on a single payment or if the balance is not paid off in full before the introductory period ends.


Where to Learn More

  1. https://www.ftc.gov/legal-library/browse/statutes/credit-card-accountability-responsibility-disclosure-act-2009-credit-card-act
  2. https://www.investopedia.com/terms/c/credit-card-accountability-responsibility-and-disclosure-act-of-2009.asp
  3. https://wallethub.com/edu/cc/card-act-guide/25814