November 24, 2015
What the credit card reform law means to you
A primer on how the Credit CARD Act has changed the rules
By Connie Prater
Updated: June 13, 2012
Credit card users are benefiting from the most comprehensive consumer protections on credit terms, interest rates and fees in decades thanks to a federal law that took effect beginning in 2009.
After years of complaints about "gotcha" fine print and confusing terms, the reform law mandated more transparency and easier-to-understand terms -- but it has come at a higher upfront cost.
"The most vulnerable consumers, those who carry a balance, have been protected by the protections of the CARD Act," says Chi Chi Wu, staff attorney for the National Consumer Law Center, a Boston-based consumer advocacy group. "Some of the worst abuses were addressed, including retroactive rate increases. It put the brakes on some of the fees. They are still kind of high, but it kept them from going up."
The new normal
Now that a few years have passed, credit card issuers and credit industry analysts say the credit card reform law has made credit cards somewhat more costly for all users and less accessible for people with low income and bad credit . However, the direst predictions -- that the law would mean the return of routine annual fees and fewer rewards cards -- have not panned out.
President Obama signed the Credit CARD Act of 2009 into law May 22, 2009. (Read the act .) The law directed several federal agencies to work out the fine details of enforcement, and they did so over the two years following the CARD Act's enactment.
In the end, what has the law meant for cardholders? Millions of credit card users are protected from retroactive interest rate increases on existing card balances and have more time to pay their monthly bills, greater advance notice of changes in credit card terms and the right to opt out of significant changes in terms on their accounts. The law gave consumers a bit more time -- 45 days instead of 15 -- to shop around for better deals if they don't like the new terms.
The CARD Act's consumer protections were phased in over 15 months. The first provisions took effect Aug. 20, 2009, and the majority of rules started on Feb. 22, 2010 , while the final batch kicked in Aug. 22, 2010 .
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