New Credit Card Provisions Begin to Take Effect

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act), which amends the Truth in Lending Act, imposes restrictions on credit card interest rates, disclosures that must be provided to cardholders, billing practices, credit limits, gift card expiration requirements and the ability for underage consumers to obtain credit cards.

The majority of the provisions go into effect on Feb. 22, 2010, but two of the provisions went into effect Aug. 20, 2009.

One of the provisions requires credit statements be mailed or delivered to the consumer at least 21 days prior to the due date. Otherwise, a creditor may not treat a payment as late. If an account has a grace period, finance charges for the month cannot be assessed unless the statement is mailed or delivered 21 days before the grace period expires. Unlike most of the Credit CARD Act’s provisions, this requirement applies to all open end credit accounts, not just consumer credit card accounts.

The second provision effective on Aug. 20 requires creditors provide at least 45 days advance notice of any significant changes to the terms of a credit card agreement, including changes in interest and fees. According to interim final rules issued by the Federal Reserve Board, the notice must contain a description of the changes made to the terms and the date the changes will become effective. The same notice must inform consumers of their right to reject the changes prior to the date the changes will go into effect.

The notice must include instructions for rejecting the changes and a toll-free telephone number the consumer may use to notify the creditor of the rejection. If applicable, the notice must also include a statement that if the consumer rejects the changes, the consumer’s ability to use the account for further advances will be terminated or suspended. Rejection of the changes to the account will not constitute a default under the existing credit card agreement and will not trigger immediate repayment of the account.

ACA members may view an overview of the Credit CARD Act.

View the Credit Card Accountability Responsibility and Disclosure Act of 2009.