Home / Blog / How the Credit CARD Act Helps You

How the Credit CARD Act Helps You


In an effort to create greater transparency between customers and credit card companies, the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD) introduces consumer-friendly litigation that regulates how banks control credit card fees. Notably, the new law standardizes how a bank can increase interest rates, change introductory offers and delinquent payments.

Interest Rate Changes

The CARD Act of 2009 says that credit card lenders no longer have the ability to blindside customers with credit card interest rate increases. Banks can't increase rates within the first year of the account, and after this grace period, any interest rate increases must include 45 days notice to the card holder about any new changes or fees. Additionally, the credit card interest rate changes do not affect the previous balance carried on the card. However, there are some exceptions to the rule. Some creditors issue credit cards for bad credit that have a variable-rate tied to an index, allowing the interest rate to change at any time. Other examples of interest rate changes include penalties for accounts with 60 day delinquency, and introductory rates that expire under the new terms set by the issuer's cardholder agreement.

Credit Card Introductory Offers

Before the CARD Act, credit card companies had the ability to increase introductory rates on zero interest credit cards or low interest credit cards if a card holder missed a single payment. Nowadays, interest rates can only increase if a cardholder is more than 60 days delinquent on payment.

Delinquent Credit Cards Payment Penalties

One of the main areas of focus for the CARD Act is to limit the amount of rolling debt a cardholder can accrue. When it comes to delinquent credit card payments, the CARD Act caps the late fee for the first missed payment at $25. This amount can increase to $35 if the cardholder misses a payment within the next six billing cycles or if the credit card issuer can prove the missed payment justifies a higher fee. However, with other fees and penalties, the fee cannot exceed the amount due. If a cardholder were to exceed the credit-limit on a card and $20 was the minimum payment, the card issuer can only charge a $20 fee.

Photo credit: Shutterstock / nakamasa

Sign up for our monthly newsletter.

Get the latest tips & advice from our team of 30+ credit & money experts, delivered to you via email each month. sign up Now

Logan Abbott's picture

Logan Abbott is a personal finance and credit card expert with over 5 years of experience writing about each topic. He is a graduate of the USC Marshall School of Business, and also contributes to other online finance publications. He has been quoted in the New York Times, San Diego Union Tribune, TheStreet, and more.

Visit 's Google Plus profile for more.