Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) By: Fran Sponsler, CRCM, CCBCO Date: 2/4/10 The Credit CARD Act amends the Truth in Lending Act, the Electronic Funds Transfer Act, and the Federal Trade Commission Act, thus expanding regulatory prohibitions against certain unfair practices, restricts additional practices, and establishes new disclosure requirements. In addition, regulatory penalties have been increased for violations of the Truth in Lending Act as they relate to the new credit card amendments.  Key elements of the Credit CARD Act that become effective on February 22, 2010, are those that affect rates, terms, and fees; disclosures; and credit offered to young people, as outlined below: I.   Rates, fees, and terms      A.  Application of payments Monthly payment amounts that exceed the minimum payment due must be applied to balances with highest interest rate first, then to balances to the next highest interest rates, and so on.      B.  Double cycle-billing Interest charges on debt paid on time cannot be calculated using the previous month’s balance unless there is an adjustment due to disputed purchases or a payment was returned for insufficient funds.     C.  Due dates and times Payment due dates must the same each month.  If the due date falls on a weekend or holiday, the payment must be posted on the next business day without late fees or penalties.  Payments made at a local branch must be credited on the same day received. Setting early morning deadlines for payments is prohibited.     D.  Restriction on certain fees and interest charges Credit card issuers are prohibited from charging additional fees to pay bills by mail, electronic funds transfer, telephone or other methods. Cardholders must be given the option to opt-in to cover the limit fees.  Otherwise, if they attempt to make transactions that exceed their limits, the transactions will be rejected. Cardholders can opt-in in orally, in writing, or electronically.  Cardholders who chose to opt-in must be informed of the fees and have the right to revoke their option at any time. Only one over-limit fee can be charged during the billing cycle and no fee is permitted if the over-limit is solely due to interest charges or fees.  II. Disclosures      A.  Late payments Full disclosure is required on monthly credit card billing statements regarding the dates for which payments are due and when late charges will be assessed.       B.  On-line agreements Credit card issuers must post credit card agreements on the Internet and provide copies to the Federal Reserve Board.     C.  Payoff time Monthly statement disclosures must include the amount of time it will take to pay off the balance in full if the cardholder only pays the minimum monthly payment along with the amount they will pay, including interest and how much they would have pay each month if they wish to pay off the balance in 36 months.     D.  Interest rate Promotional rates are required to last at least six months. Changes in card terms that take effect upon renewal must be disclosed. Use of the term ‘fixed rate’ is prohibited unless the APR or interest rate will not vary for any reason over the period specified. III. Credit offered to young people     A.  Extending credit Credit card issuers are prohibited from offering credit cards to individuals under the age of 21, unless they have an adult co-signor or can provide evidence of the ability to repay the extended credit.   Credit limit increases are prohibited without the permission of both the cardholder and other jointly liable individual.     B.  Marketing Prescreened credit offers must not be sent to individuals who are younger than 21 years old. Additional protections for students against inducement or enticement for signing up for credit cards on or near college campuses and at college-sponsored events.