Provisions of the Credit CARD Act of 2009

The goal of this legislation that became fully in effect February 22, 2010, is for consumers to easily determine what fees lenders charge, when, and for what amount. Here is a summary of new restrictions imposed on credit card companies.

Interest Rates

Companies cannot raise interest rates on existing balances for the first 12 months after you open an account unless:

  • Your card is tied to a rate index, which moves up and down over the course of time.
  • The period for an introductory (“teaser”) rate ends (see Beware of Teaser Rates).
  • The account is at least 60 days overdue.

However, credit card companies can increase interest rates for new charges, but only after the first 12 months of opening your account

  • Over-the-Credit-Limit Fees. Consumers must agree in advance (opt-in) to pay for purchases that exceed their credit limits. If that advance agreement is not made, credit card companies will deny purchases that exceed credit limits.
  • Caps on High-Fee Cards. Some credit card companies charge an application fee, or annual fee to use the card. These fees cannot exceed 25 percent of your credit limit. For example, if a card has a $500 credit limit, application or annual fees charged for the first year can’t exceed $125. This provision does not apply to penalty fees, such as a late payment fee.


  • Companies may not charge consumers a fee to pay by phone, electronic funds transfer, or mail unless the consumer requests to expedite the payment.
  • For balances charged one APR for purchases and another APR for cash advances (usually a much higher APR), the portion of a credit card payment that exceeds the minimum balance must be applied to the balance with the higher APR.
  • Consumers must receive statements at least 21 days before the grace period ends—the period where purchases are not subject to interest charges.
 Due Dates  Due dates must be the same every month.
Student Cards  Consumers under the age of 21 are eligible for a credit card only if they can demonstrate independent sources of income or if a parent, guardian, or spouse co-signs the credit card contract.
 Gift Cards  Issuers of prepaid cards, gift cards, and gift certificates cannot charge service or inactivity fees unless 12 months have passed. Cards cannot expire within five years of the card’s activation date.

Source: Board of Governors of the Federal Reserve System. “What You Need to Know: New Credit Card Rules Effective Feb. 22.”



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