New federal law gives credit card users protection

On Aug. 20, 2009, part one of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 went into effect. The CARD Act gives credit card users greater protections against unfair rate hikes and hidden fees. The key protections of the CARD Act that are now in effect are:

Credit card issuers must provide their customers at least 45 days advance notice of any significant changes in their credit card contract. Furthermore, card issuers must inform you that you have a right to cancel the credit card and not accept the changed terms and provide you with their requirements for such cancellation including a toll-free number and a deadline date for such card cancellations. Previously, credit card issuers only had to provide 30 days notice of such changes. This change provides card holders a chance to review the changes and then act to terminate the credit card contract if those changes are unacceptable.

Credit card issuers are now required to mail bills at least 21 days before the payment due date upon which late fees may be then be charged. Previous laws only required them to mail the bill 14 days before the due date and many people on short absences from home, such as vacations, were stuck with a late fee.

Credit card customers now have the right to opt out of interest rate and fee increases (provided they are not 60 days in arrears in payments) on fixed rate charge card account, not variable rate accounts. Once credit card customers opt out, they no longer may make purchases with the credit card. However, they have the right to cancel their credit card contract and pay off their existing account balance under the preexisting, lower rate. Credit card issuers cannot demand payment in full for outstanding balances and cannot charge a monthly maintenance fees for maintaining the account.

Part two to the protections will go into effect in February 2010.

People eligible for legal assistance services should contact the Legal Assistance Office at (202) 782-1550 to discuss your legal matters. If you are not sure if you are eligible for legal assistance, contact the Legal Assistance Office.