The Credit CARD Act OF 2009 passed many provisions that benefitted consumers when dealing with credit card companies. That act remains in place today, and experts predict it saved consumers billions of dollars.

Understanding certain aspects of this lawn can help individuals avoid the trap of credit card debt.

Main features of the legislation

According to, the CARD Act prevents credit card companies from imposing arbitrary interest rate increases onto customers. Under the provisions of the Act, companies must give a cardholder a 45-day notice of a rate increase. The required notice must include language that allows the cardholder to opt-out of the agreement.

Another provision of the law requires companies to allocate payments to the highest interest rate portion of a cardholder’s balance. Before this requirement, companies often applied any extra payments to the balance portion that carried the lowest interest rates. This benefitted the credit company at the expense of the cardholder.

Additional features of the CARD Act

Before 2009, credit card companies could change the date when payments came due in an arbitrary fashion. This often resulted in cardholders having to pay late fees as well as additional interest charges. Now companies must mail out statements at least 21 days before the due date, and such practices as floating due dates no longer meet legal standards.

The CARD Act also outlawed other deceptive billing practices used by credit card companies. These included unfair late fees that often exceeded the minimum amount due. The CARD Act limits late fees to $25 for a first violation and $35 for subsequent violations for six months. People who suspect a CARD Act violation should first contact the credit card company and then the Consumer Financial Protection Bureau.