President Obama signed into law the Credit Card Accountability Responsibility and Disclosure Act of 2009 on May 22, a sort of “Bill of Rights” for credit cardholders that’s been in the works for some time.

Keeping with his campaign-style messages of individual responsibility, Obama reportedly called on both consumers and credit card issuers to act responsibly and fairly with credit.

In earlier posts about this bill, we outlined some of its potential benefits and drawbacks. Here’s what the final form of the law does.

Prohibits Unfair Changes in Interest Rates & Modifications, including:

• Universal default on existing balances and arbitrary increases to interest rates
• No interest rate increases without periodic reviews of a borrower’s status and decreases to the interest rate if shown necessary by the review
• Interest rate increases in the first year of a card’s activation
• Introductory rates and terms that last less than six months.

Prohibits Unnecessary and Excessive Fees, specifically:

• Fees for certain electronic and digital payments
• Over-limit fees for transactions not okayed by the cardholder
• Penalty fees that are unreasonable or disproportionate to the offense
• General excessive fees and penalties on low-limit, high-interest cards

Demands Fairness in Timing & Application of Card Payments, specifically:

• Payments over the minimum must be applied first to balances with highest interest rate
• Early morning payment deadlines are banned
• Bills must be sent 21, rather than 14 days prior to their due date

Protects the Interests of Responsible Credit Users by:

• Prohibiting double-cycle billing
• Prohibiting late fees for billing postponed by the card issuer
• Demanding same-day credits for payments posted at local branches
• Requiring that card issuers consider a borrower’s capability to pay before issuing a card

Requires Improved Disclosures on Card Terms & Conditions, specifically:

• 45-day notice requirement for fee and interest increases
• Issuer-provided notices to borrowers upon card renewal of any modification to terms
• Issuer-provided estimate of length of repayment period if only minimum payments are made
• Full late-fee disclosure in each bill.

Increases Oversight of the Credit Card Industry by:

• Requiring issuers to post terms & agreements on the web and distribute a copy to the Federal Reserve Board to post as well
• Requiring the Federal Reserve Board to review the current state of consumer credit
• Requiring the FTC to prohibit advertising “free” credit reports other than those available at www.annualcreditreport.com

Improves Protections for Young Cardholders by:

• Requiring parents or guardians to effectively cosign card agreements for those under 21
• Limiting pre-approved card offers to young people
• Restricting interest increases for young people’s cards unless adult cosigner approves the increase
• Improving student protection against cards marketed at universities.

The Other Consumer Protections

The new credit card law also includes protections for small businesses, rules about gift cards and provisions for promoting financial literacy.

If you're struggling with credit card debt, consider filing bankruptcy.

Tags: chapter 7 bankruptcy, credit card, credit card law