Credit Card Accountability Responsibility and Disclosure Act of 2009

Credit card debt is a drain on the household wealth of low-income families. A majority of low- and middle- income families report using their credit cards to pay for basic living expenses, and interest rate hikes and fees fall most heavily on those who can least afford to pay. The Credit Card Accountability Responsibility and Disclosure Act of 2009 protects consumers by amending the Truth in Lending Act (TILA) to prevent practices that unfairly harm credit cardholders, including:

• Retroactive interest charges: Unless the cardholder is more than 60 days late paying a bill, card companies will not be allowed to hike interest rates retroactively on balances accrued. If such interest rate increases occur, the card issuer must lower the rate after six months of on-time payments.[1]
• Universal default: Credit card issuers will not be allowed to increase customers’ interest rates based on their payment history with other non-related creditors.[2]
• Costly payment application methods: Card companies must apply payments in excess of the minimum amount to the credit card balance with the highest rate of interest.[3]
• Unfair billing practices: Card companies will be prohibited from imposing interest charges on any portion of a balance that is paid by the due date. Furthermore, consumers will now be required to agree in advance to buy over-the-limit purchase protection.[4]
• Irresponsible lending and aggressive marketing to young consumers who do not have the ability to repay debt: Credit card issuers will not be able to extend credit to consumers under the age of 21 unless the person has an independent means to repay the loan or there is a cosigner who has such ability.[5]

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