The CARD Act & Your Credit

Demystify the New Laws Affecting YOUR Credit Cards!

Fab & Fru recently had the pleasure of speaking with our good friend Clarky Davis, aka The Debt Diva about the  Credit Card Accountability Responsibility and Disclosure Act (CARD ACT) that went into full effect on February 22, 2010.  We just love Clarky  — a woman who has been to debt and back, and now advises others on how to avoid the pitfalls of plastic.  And luckily, she also has taken the time to read through all of the legal mumbo jumbo to demystify the CARD Act for us.   Here’s what YOU need to know!

1.  45 Days Notice

Card companies will have to give customers 45 days notice before raising their interest rates. There is no cap on how high they can raise your rate, but they must now give you notice well in advance that a raise is taking place.

2.  Universal Default

The practice of universal default is now a thing of the past as well as “any time, any reason” interest rate hikes on existing balances.

3.  Stabilized Contract

Your contract with your respective creditor is stabilized for the entire first year of owning a credit card, and additional promotional rates during the life of the account must be clearly explained and stay stable for at least 6 months.

4.  Interest cost section

There is a new section on credit card statements showing the interest cost and length of time it will take to pay off the balance if the minimum amount is paid each month, as well as the amount that should be paid in order to pay off the balance in 36 months.

5.  Over-limit fees

It will be easier to avoid over-limit fees because now you have to opt-in for the ability to charge above your credit limit (and accept the resulting fees). This is good news for consumers who don’t want to get hit with fees when they mistakenly charged over their limit!

6.  Credit Card Statements

Another new requirement for credit card statements is a display of current and YTD fees with the reasons behind each fee. This will allow consumers to track their bad spending habits.

7.  Due Dates

Due dates must now be a minimum of 21 days after mailing the credit card bill.

8.  Late Fee Traps

Late fee traps such as middle-of-the-day deadlines, weekend deadlines, and deadlines that are inconsistent from month to month are now banned.

9.  Highest-Interest Balance First

Excess payments above the required minimum amount must now be applied to the highest-interest balance first.

10.  Credit Card contracts

Credit Card contracts must be available online in relatively usable language to make it easier to monitor changes in the contract. (Previously only available in print in complicated terms.)

*These points are good news for consumers as they provide greater protections. However consumers should not look to this new law as a “cure” to their debt woes. This law doesn’t fix the fundamental money management issue many of us are experiencing.  We must become better educated and more disciplined in how we handle credit and debt, so hopefully this breakdown of the CARD ACT will give you somewhere to start!


Clarky Davis is the spokesperson for Care One Credit Counseling ( –Get more fabulous tips from The Debt Diva herself!

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