Credit CARD Act of 2009

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Credit Card Accountability Responsibility and Disclosure Act of 2009
Great Seal of the United States
Long title An Act to amend the Truth in Lending Act to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes.
Enacted by the 111th United States Congress
Effective February 22, 2010
Public Law 111-24
Statutes at Large 123 Stat. 1734 through 123 Stat. 1766
Acts amended Truth in Lending Act
Fair Credit Reporting Act
Electronic Fund Transfer Act
Omnibus Appropriations Act, 2009
Titles amended Titles 5, 11, 15, 20 and 31
Legislative history

The Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit CARD Act of 2009 is a federal statute passed by the United States Congress and signed by President Barack Obama on May 22, 2009. It is comprehensive credit card reform legislation that aims " establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."[1] The bill was passed with bipartisan support by both the House of Representatives and the Senate.

Introduction and votes[edit]

The Credit Cardholders' Bill of Rights was introduced in the 110th Congress as H.R. 5244 in the House of Representatives by Representative Carolyn Maloney, a Democrat from New York and the chair of the House Financial Services Committee's Subcommittee on Financial Institutions and Consumer Credit. The bill had passed 312 to 112 but was never given a vote in the Senate.

In the 111th United States Congress the bill was reintroduced as H.R. 627 and on April 30, 2009, the House passed 357 yes votes to 70 no votes. The Senate followed suit and passed an amended version on May 19 with 90 yes votes and 5 no votes.[2] The House passed the amended bill the next day by a vote of 279 to 147 and it was signed into law by President Barack Obama on May 22, 2009.

The bill went into effect on February 22, 2010, nine months after it was enacted.


The Credit Cardholders' Bill of Rights includes several provisions aimed at limiting how credit card companies can charge consumers but does not include price controls, rate caps, or fee settings.[3]

Key provisions include: (1) Giving consumers enough time to pay their bills. Credit card companies have to give consumers at least 21 days to pay from the time the bill is mailed. Credit card companies can not "trap" consumers by setting payment deadlines on the weekend or in the middle of the day, or changing their payment deadlines each month. (2) No retroactive rate increases. Credit card companies must give consumers at least 45 days notice if their rates are about to go up, and can not change any terms of the contract within a year. Low introductory rates must last at least six months. (3) Easier to pay down debt. Credit card companies must apply payments to a consumer's highest interest rate balances first. Statements must show consumers how long it would take to pay off their existing balance if the consumer made only the minimum payment, and must show the payment amount and total interest cost to pay off the entire balance in 36 months. (4) Eliminates "fee harvester cards." The act restricts fees on low-balance cards sold to cardholders with bad credit. For many of these cards, the up-front fees charged exceeded the remaining credit.[4] The act also restricts the fees that can be charged for gift cards and other prepaid cards. (5) Eliminates excessive marketing to young people. Consumers under 21 the age of 21 must prove that they have an independent income or get a co-signer before applying for a credit card. The Act also prevents credit card companies from mailing offers to consumers under 21 unless they "opt in," and prohibits companies from wooing students with t-shirts, free pizza and other free gifts at university-sponsored events.[5]

Amendment on guns in national parks[edit]

Gun rights advocates in the Senate, led by Tom Coburn (R-Okla) added an unrelated rider to the bill to prevent the Secretary of the Interior from enforcing any regulation that would prohibit an individual from possessing a firearm in any unit of the National Park System or the National Wildlife Refuge System.[6][7] The Senate passed the amendment 67-29.[8][9]

This amendment overturns a Reagan-era policy prohibiting firearms from being carried in national parks. The George W. Bush administration had attempted to implement a similar policy through the rulemaking process just before leaving office, but the change was struck down by a federal judge. The provision has been heavily criticized by environmentalists, anti-gun groups, and park supporters, including the Coalition of National Park Service Retirees, but it was heavily applauded by gun rights groups.[9][10]


Elizabeth Warren delivers the keynote speech entitled "The CARD Act: One Year Later" at an evaluation symposium held February 22, 2011

The act was not expected to affect existing credit card contracts.[11] However, the act that was passed applies to contracts made in the past by setting an effective date of February 22, 2010, which gave banks time to prepare and notify their customers. The Consumer Financial Protection Bureau in its October 2013 report on the CARD Act found that between the first quarter of 2009 and December 2013, credit card interest rates increased on average from 16.2% to 18.5%, while the “total cost of credit,” that is, the total of all fees and interest paid by all consumers as a percentage of the average cycle-ending balance, decreased by two hundred basis points.[12] The CFPB made no judgment on the extent to which the CARD Act contributed to these increases and decreases. However, interest rates on other types of consumer credit increased. The CFPB in its study also found that consumers paid less in late payment and over-the-limit fees since passage of the CARD Act. In contrast, studies by[13] and the Center for Responsible Lending[14] argued that interest rate trends were the result of economic pressures typical of a recession and not the law. According to these studies, historical economic data shows that the interest rate increase and decline in available credit seen during the Great Recession should have been worse considering the widespread unemployment, credit card delinquency and credit card charge-offs.[13][14]

In addition, the CARD Act may have made credit cards and credit card credit less available, especially to those with little or flawed credit histories. The American Bankers Association,[15] in its letter responding to the CFPB’s request for information on the impact of the CARD Act found credit cards and credit card credit to be less available during the period when key provisions restricting interest rate increases that ultimately incorporated into the CARD Act were initially proposed by the Federal Reserve Board in December 2008, particularly for subprime borrowers. It found that the amount of credit card debt outstanding decreased at a higher rate than other consumer debt. Furthermore, it found that credit card debt as a percent of disposable income decreasewhile non‐revolving, non‐mortgage debt as a percent of disposable income increased.

It notes that while the severe economic conditions had an impact on both credit card interest rates and credit card availability and lines of credit, the disparity between the costs, availability, and use of credit card credit and other consumer credit products during the relevant time period strongly suggests that the increased costs and reduced availability of credit cards cannot be explained by the economy alone.

And that the CARD Act and related changes in the regulations applicable to credit cards are almost certainly a significant factor in the higher costs and decreased availability of credit cards.

In a speech on the one-year anniversary of the CARD Act, Special Adviser Elizabeth Warren said that "much of the [credit card] industry has gone further than the law requires in curbing re-pricing and overlimit fees."[16] However, she said there was still much work to be done, that the Consumer Financial Protection Bureau's "next challenges will be about further clarifying price and risks and making it easier for consumers to make direct product comparisons."[17][18][19]

In 2012, many stay-at-home mothers complained that because they have no individual income, the act prevents them from acquiring credit cards without their husbands' permission.[20] As of September 21, 2012, the CFPB announced that they would be making the change[which?] due to a petition on[21]

Sponsors and cosponsors[edit]

The bill was cosponsored by House Financial Services Committee chair Barney Frank and Representatives Maxine Waters, Luis Gutiérrez, Stephen Lynch, Keith Ellison, Steve Cohen, Chaka Fattah, Maurice Hinchey, Jim Langevin, Jerrold Nadler, Carol Shea-Porter, Hilda Solis, Peter Welch, Albert Wynn, Peter DeFazio, Charles Gonzalez, Gene Taylor, David Obey, Mazie Hirono, Debbie Wasserman Schultz, Nancy Boyda, John Dingell, Corrine Brown, Bennie Thompson, Alcee Hastings, Yvette Clark, Jesse Jackson, Danny Davis, Kirsten Gillibrand, Eddie Bernice Johnson, Diane Watson, Michael Arcuri, Eliot Engel, John Tierney, Chris Van Hollen, George Miller, Jim Moran, Anthony Weiner, Neil Abercrombie, and Jan Schakowsky.


  1. ^ "Text of H.R. 627 (111th)". Retrieved March 28, 2012. 
  2. ^ "H.R. 627 (111th): Credit Card Accountability Responsibility and Disclosure Act of 2009 (On Passage of the Bill)". May 19, 2009. Retrieved August 11, 2014. 
  3. ^ Public Law Summary by Congressional Research Service, THOMAS, Library of Congress
  4. ^
  5. ^
  6. ^ Title.V. Section.512. of Public Law 111-24
  7. ^ Amendment SA 1067 proposed by Senator Coburn to Amendment SA 1058 of HR 627
  8. ^ Lillis, Mike (May 12, 2009). "Senate Approves Coburn Gun Amendment…in Credit Card Bill". The Washington Independent. Retrieved June 13, 2009. 
  9. ^ a b The New York Times. "Bill Changing Credit Card Rules Is Sent to Obama With Gun Measure Included". By Carl Hulse. Published: May 20, 2009
  10. ^ McGuire, Kim (February 20, 2010). "Law change allows guns at U.S. parks, wildlife areas". St. Louis Post-Dispatch. Archived from the original on February 24, 2010. Retrieved August 11, 2014. 
  11. ^ "Bingaman backs Credit Card Reform". KRWG. May 11, 2009. Retrieved October 19, 2009. 
  12. ^ "CARD Act Report". October 1, 2013. Retrieved April 30, 2014. 
  13. ^ a b "Study: The CARD Act's Impact on Rising Interest Rates". Retrieved June 23, 2011. 
  14. ^ a b "Credit Card Clarity: CARD Act Reform Works". Center for Responsible Lending. Retrieved June 1, 2011. 
  15. ^ "ABA Letter to CFPB re: Notice and request for information regarding the credit card market". February 19, 2013. Retrieved April 30, 2014. 
  16. ^ Warren, Elizabeth (February 22, 2011). "The CARD Act: One Year Later". Remarks by Elizabeth Warren on The CARD Act. U.S. Department of the Treasury. Retrieved October 27, 2011. 
  17. ^ Saenz, Arlette (February 22, 2011). "Warren Praises Credit Card Industry for Transparency Efforts for Borrowers". ABC News. Retrieved October 27, 2011. 
  18. ^ Clarke, Dave; Aspan, Maria (February 22, 2011). "Credit cards still in US watchdog Warren's sights". Reuters. Retrieved October 27, 2011. 
  19. ^ Delaney, Arthur (February 18, 2011). "Elizabeth Warren: Shortcomings Of Credit Card Reform Show Need For CFPA". Huffington Post. Retrieved October 27, 2011. 
  20. ^ Ellis, Blake (May 16, 2012). "Stay-at-home mom fights new credit card rule". CNN Money. Retrieved May 16, 2012. 
  21. ^ McCall, Holly. "Don't set us back half a century! Give stay-at-home moms credit.". Retrieved May 16, 2011. 

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