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Credit Card Act

As the name suggests, here in this article we would be getting to know about the Credit Card Act.


As the name suggests, here in this article we would be getting to know about the Credit Card Act i.e.

  • What is Credit Card Act
  • Purpose it Serves
  • Reasons behind its inception
  • What it left out and
  • Change it brought about in the Credit Card Industry.

What is Credit Card Act

CARD Act also called Credit Card Accountability Responsibility and Disclosure Act of 2009,  was as an US federal law brought into force by Obama Administration. It brought about a fundamental change in the SOPs (Standard Operating Procedures) of Credit Card Industry.

In other words, it changed the way credit card companies (issued credit cards, charged for its services and ran the credit card game).

It came into force on 22nd May’ 2009 with an aim to add teeth to consumer rights.

12 major clauses that does the job in CARD act

  1. Limited Interest Rate Hikes
  2. Limited Universal Default
  3. The right to opt out
  4. Limited credit to young adults
  5. Clearer due dates and times
  6. Highest interest balances paid first
  7. Limits on Over-Limits Fees
  8. No more double-cycle billing
  9. Subprime cards rules set
  10. Minimum payments disclosure
  11. Late fee restrictions and
  12. Gift cards expiration rules

What it left out uncovered

Despite the reforms being of an encouraging nature, but yet they do not offer complete protection to credit card users. Credit Card Companies can still increase interest rates on future purchases made using card and there is no cap i.e. upper limit on interest rates. Business and Corporate Credit Cards are left out of the CARD act security umbrella.

If credit card accounts are variable APR based (the majority of them are as of now), then interest rates can go up proportionately with prime rate. Moreover, credit card companies still continue the practice of account closure and abruptly slashing credit limits in the absence of  any provision for law mandated prior warning to cardholders.

To conclude, Credit Card Act or CARD act was a move by Obama Administration to avoid the repeat of history i.e. subprime mortgage crisis that he inherited from Bush Administration. He achieved all this by overhauling the operating basics in complete, of US Credit Card Industry and world in entirety.