How Does the Credit Card Act of 2009 Affect Credit Card Contracts?

The Credit Card Act of 2009 was designed to help consumers and protect them from predatory practices by credit card companies. Credit cards are one of the biggest problems facing Americans today. According to recent statistics, 80% of American families have a credit card. In addition to that 44% of families carry a balance on their credit cards. When you carry a balance on your credit cards, you are paying interest that you can not afford to pay in most cases. This means that almost half of the country is paying unbelievably high credit card interest rates. The Credit Card Act of 2009 was designed to help Americans with debt, here a few ways that the Credit Card Act of 209 affects credit card contracts.

Retroactive Rate Increases

In the past, credit cards companies had a lot of freedom and could raise your interest rate at any given time. Also, they were able to retroactively raise your rate, which means they could go back in time and charge you a higher rate of interest on your balances. Many cards could do this at any time they felt like it which left consumers in a lot of uncertainty. The Credit Card Act of 2009 changes this procedure. It bans the ability for card companies to increase rates at any time and severely limits their ability to do it because of late payment. 

First Year Protection

In the past, credit card companies could change their terms whenever they wanted. People would sign up for a card thinking they were getting one set of terms and before the year was up, the terms changed. This is now prohibited by the Credit Card Act of 2009. They have to leave the terms set for at least the first year. This provides continuity for new credit card users and can help with budgeting.

Late Fee Traps

Credit card companies are notorious for charging late fees. They set late fee. For example, they do not send you your statement in time for you to make the payment by the due date. Or, they would make the due date on a weekend or even during the middle of the day. Therefore, if your payment was not posted to your account by 12:00 p.m. they would charge you a late fee as a result. This practice has now been banned. 

Processing Interest

Before the Credit Card Act of 2009, credit card companies could apply your payment to whichever interest rate they wanted. For example, if you get a cash advance, the rate that you are charged is greater than if you just buy something with your card. When you made a payment, they could apply the payment to the lower interest rate and leave the higher interest rate untouched. Now, credit card companies have to apply the payment to the highest interest rate first.


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