What the CARD ACT Means For Consumers

The Credit Card Accountability, Responsibility, and Disclosure Act (CARD) has been floating around Congress for several years. In 2005 it was called S499 but died, in 2007 it was called HR1461, in 2008 it was called S3252 and it was finally approved on May 22, 2009 by President Obama as S414.

The Act provides the most significant changes to the credit card industry since 1969. President Obama stated the act will "restrict practices he says contributed to consumers' financial problems during the recession. We're not going to be giving people a free pass and 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."

The Act is a huge win for consumers and college students who have been victims of the unfair practices of credit card companies. A few highlights of the Act are:

1. Banning unfair rate increases
2. Prevents fee traps
3. Requires easy explanation of disclosures
4. Statements will tell consumers how long it will take to pay off a balance by making only the
minimum monthly payment
5. Eliminate credit card rate hikes
6. Provide credit card agreements online
7. Consumers will be mailed statements 21 days before the due date
8. Payment dates will no longer be shifted
9. Consumer approval required for over-the-limit transactions
10. Restrictions on interest rates and credit cards offered to college students under age 21 without
verifying employment or getting parent's permission

Unfortunately the Act does not put a cap on credit card interest rates so interest rates can still increase but consumers will have to be notified before the rate increase becomes effective.

This Act will provide a more level playing field allowing consumers to shop around for the best deal and hopefully offer a more competitive market instead of the market being dominated by a few top banks and credit card companies.

Make sure you read everything that comes in the envelope with your statement each month and if you don't understand something contact the credit card company right away. If you feel you are being a victim of unfair practices notify the company and file a complaint with the Federal Trade Commission or your state Consumer Affairs Office.

The credit card companies are waiting for you to mess up or throw away something that you should have read, don't let them win.