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CARD Act: Five Actions To Maximize New Rules

The Credit Card Accountability Responsibility and Disclosure Act of 2009, commonly referred to as the CARD Act, enacts a new set of financial protections for consumers.

OnTrack WNC encourages consumers to take advantage of the opportunities afforded by the CARD Act. Listed here are five changes related to consumers’ credit card accounts along with suggestions regarding how to maximize the provisions to your advantage:

  • Review monthly billing statements. Two new features will be added to the statements:
    • Issuers must now include a snapshot of how long it will take consumers to pay off their balance if they only make the minimum payment each month. This will be contrasted against the payment required to become debt free in three years. This reality check provides the opportunity to stop digging deeper into debt and instead start digging out.
    • Credit card issuers are now required to include a toll-free number where consumers may receive information about credit counseling agencies like OnTrack WNC. Consumers in financial distress can now use the phone number listed on their credit card statement as a resource. Of course, if you are in western NC we recommend that you contact OnTrack WNC to obtain solid advice and find solutions.
  • Pay attention to all mailings, statement stuffers, and fine print. Under most circumstances, the issuers must now give consumers 45 days notice before they increase the interest rate, change fees, or make other significant alterations to the terms of an account. This provides the consumer with time to evaluate the revisions and decide if they want to apply for another credit card that offers better rates and terms than the existing one.
  • Inform the creditor whether or not you want to allow transactions that will take you over your credit limit. A consumer must tell his or her credit card company if he or she wants to allow approval of purchases over their credit limit or the transaction may be turned down. If a person does not opt-in to over-the-limit transactions and the credit card company allows one to go through, it cannot charge an over-the-limit fee. Also, if a consumer does opt-in to allowing transactions that take him or her over the credit limit, the credit card company can impose only one fee per billing cycle.
  • Check your credit report for accuracy. Card issuers are restricted from opening a new account or increasing credit lines unless the issuer first takes into consideration the consumer’s ability to repay under the terms of the agreement. To satisfy this requirement, creditors will likely begin using income estimation models supplied to them by the credit bureaus. These tools will review, among other things, data contained in the consumer’s credit bureau report.
  • Pay your bills on time. This should be easier because consumers will know in advance when their payment is due (same date each month) and have ample time to meet the due date because creditors are required to ensure that your bill is mailed or delivered 21 days in advance of the due date. In addition, no extra fees can be assessed if payment is made by phone or electronically. These provisions allow consumers to plan their payments, making it much easier to stay current.

“The CARD Act provides cardholders with clearer terms and improved disclosures which will go a long way toward ending confusing billing practices. These changes will definitely help empower consumers to take control of their financial future,” commented Celeste Collins, OnTrack WNC Executive Director.

How savvy are you about the CARD Act?

The financial website www.CreditCards.com has created a quiz to test consumers' knowledge about the CARD Act.  Take their quiz here to see how you score.

Quiz is provided courtesy of www.CreditCards.com.

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