What Does The CARD Act of 2009 Do?

by Greg on February 27, 2010

This “consumer-friendly” Act was all over the news recently, so I know you’ve heard about it.

The question is…did you really pay attention to what it does?  Or did your eyes glaze over (like mine did) when you started trying to wade through all the fine print at the Federal Reserve Bank’s Website?

Please feel free to visit that site for the “official” information on the Credit Card Accountability Responsibility and Disclosure Act of 2009 (although some people call it “The CARD Act of 2010″ because it took effect on February 22, 2010.)

But, if you want a quick summary of the most important parts of this bill, simply read below:

  • Your credit card company must notify you 45 days before they can increase your interest rate, change certain fees, or make other “significant changes”
  • With a few exceptions, they cannot increase your rate for the first 12 months (introductory rates can still be offered, but they have to last at least 6 months)
  • Only your new charges are subject to higher interest rates (this is big)
  • More oversight for consumers under age 21.  I wish this would have been in place back when I got my first credit card on my college campus the day after I turned 18!
  • Payment dates, times, and length of time to pay are more standardized
  • Any additional amounts over your minimum, or extra payments you make must be applied to your highest rate balances first.

Now, for the very top, most important thing that comes out of this Act:

They must show you, in very plain, easy-to-understand language, exactly how long it will take to pay off your balance.

Graphic showing requirement for credit card companies to tell you how long it will take to pay off your balance

Sample of Information Your Bank Is Required To Tell You

This is a huge win for all of us consumers, as even the busiest or lease financially savvy among us can instantly “get it”…and more importantly, start doing something about it.

Please, please, please take note of the time required to pay off your balance if you make only the minimum payment (11 years in the sample above).  This isn’t hype – this is the law the credit card companies must follow.  11 years to pay off a $3,000 balance, wasting $1,745 in interest?  Unbelievable!

Once you pick your jaw up off the floor, give us a call or email and we’ll tell you about the options available, and will prepare a no-obligation financial report customized to your exact situation.

I’d love to hear how long the bank said it will take to pay off your balances – please leave a comment below and let me know.  The highest verifiable length of time will get something special from us to cushion the blow.

Talk soon,


IMPORTANT NOTE: there are many exceptions to the items noted above (but we are all used to that with banks and credit card companies, right?!)  I wanted to compress a number of pages as much as I could in the hopes that more people would read this and take action on it instead of getting overwhelmed and just never getting to it.  For more detail, exceptions, etc., I encourage you to visit the Federal Reserve link above.


Zero Debt Guy August 10, 2010 at 4:15 pm

Excellent news on what the credit card companies can and cannot do – kudos on the credit card info!

admin August 12, 2010 at 5:01 pm

Thanks for the kind words! Your site is really well done, by the way…

Debt Consolidation February 21, 2011 at 3:06 pm

Great discussion on the Credit Act. Always like to see other blogs help keeping people informed about how credit companies try to take advantage of every loophole. You offer a great service. Thanks and keep up the good work.

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