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CARD Act of 2009: Payment Notices, Fee Restrictions, Billing Cycles

One of the first initiatives President Barack Obama decided to undertake after taking office last January was to revamp the United States’ credit card industry. At the end of 2009, there were more than 630 million credit cards circulating in the United States, with 44% of those carrying a balance.

From those cards, credit card companies collect upward of $15 million every year through penalties and fees. But all of that will change when the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 begins towards the end of this month.

What is the CARD Act?

President Obama signed the CARD Act of 2009 into effect on May 22, 2009, and several of the Act’s provisions went into effect in August of last year. The majority of the Act’s changes, however, will go into full effect on February 22.

This new federal law was created to reform the laws that regulate credit card companies in the United States, and will drastically change how they operate. Each of the following are even more areas that will be affected by the CARD Act and could affect you if you already have a credit card or could potentially open new lines of credit in the future.

These changes will affect you the most if you are already carrying a large balance on your credit cards. The best way to quickly get out of debt is to use a debt settlement service like the ones offered at Total Debt Relief. With their assistance, you could find yourself completely debt free in as little as 12 months.

Payment Notices

Prior to the CARD Act’s passing, credit card companies were not required to deliver statements to their customers on any sort of schedule. In many instances, that resulted in cardholders receiving their statements just days before – or sometimes even after – their next payments were due. That often led to customers racking up late fees before their payments were received. But thanks to the CARD Act, credit card companies now have to provide their customers with statements at least three weeks (21 days) before payments are due.

Fee Restrictions

Just as credit card companies are now required to deliver statements earlier, they also required to be more lenient before they charge late fees. Now if a payment is received on the due date or on the next business day after payments are due, credit card companies are not allowed to charge late fees. Additionally, if cardholders choose to pay their bills at a local branch, payments must be credited that same day.

Billing Cycles

A notorious money-making system used by credit card companies is known as double-billing. This involved basing finance charges on both the current and previous account balances. The CARD Act has worked to eliminate this process, preventing credit card companies from charging interest on debt that was paid the previous month.

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