Credit Card Reform – Five Years Later

The federal Credit Card Accountability, Responsibility, and Disclosure Act (CARD act) was signed into law in 2009 (15 USCA § 1601).  Often called the Credit Cardholders Bill of Rights, it has two main requirements - fairness and transparency. 

On the fifth anniversary of the passage of the CARD act, the Center for American Progress released a report assessing the progress that has since been made. According to the report, the act’s provisions resulted in improvement in a number of areas, including:

1. stopping arbitrary interest rate increases;
2. prohibiting abusive practices (e.g., fees can no longer exceed ¼ of the card’s credit limit);
3. giving consumers new transparency to better manage their accounts (e.g., consumers are now notified on each statement how long it would take to pay off the card if only the minimum payments are made);
4. providing consistency to store gift cards (e.g., cards cannot expire in less than five years); and 
5. restricting credit card eligibility for those under age 21 and removing excessive promotional credit card marketing on college campuses.

The report points to the following areas in which the authors believe regulators and policymakers can take steps to further protect consumers:

1. mandating greater transparency and regulation of prepaid cards,
2. addressing fees associated with the use of college debit cards,
3. ensuring that online and mobile tools have the same disclosures required on printed statements,
4. providing free access to credit scores on credit reports, and
5. limiting the use of credit checks for employment purposes.