The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 is a
federal statute
In the law of the United States, the Code of Laws of the United States of America (variously abbreviated to Code of Laws of the United States, United States Code, U.S. Code, U.S.C., or USC) is the official compilation and codification of the ...
passed by the
United States Congress
The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...
and signed by
U.S. President
The president of the United States (POTUS) is the head of state and head of government of the United States of America. The president directs the executive branch of the federal government and is the commander-in-chief of the United States ...
Barack Obama
Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the ...
on May 22, 2009. It is a comprehensive
credit card
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...
reform legislation that aims "to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes." The bill was passed with
bipartisan
Bipartisanship, sometimes referred to as nonpartisanship, is a political situation, usually in the context of a two-party system (especially those of the United States and some other western countries), in which opposing political parties find co ...
support by both the
House of Representatives
House of Representatives is the name of legislative bodies in many countries and sub-national entitles. In many countries, the House of Representatives is the lower house of a bicameral legislature, with the corresponding upper house often c ...
and the
Senate.
Introduction and votes
The Credit Cardholders' Bill of Rights was introduced in the
110th Congress
The 110th United States Congress was a meeting of the legislative branch of the United States federal government, between January 3, 2007, and January 3, 2009, during the last two years of the Presidency of George W. Bush. It was composed of ...
as in the
House of Representatives
House of Representatives is the name of legislative bodies in many countries and sub-national entitles. In many countries, the House of Representatives is the lower house of a bicameral legislature, with the corresponding upper house often c ...
by Representative
Carolyn Maloney
Carolyn Jane Maloney (née Bosher, February 19, 1946) is an American politician serving as the U.S. representative for since 2013, and for from 1993 to 2013. The district includes most of Manhattan's East Side, Astoria and Long Island City ...
, a
Democrat
Democrat, Democrats, or Democratic may refer to:
Politics
*A proponent of democracy, or democratic government; a form of government involving rule by the people.
*A member of a Democratic Party:
**Democratic Party (United States) (D)
**Democratic ...
from
New York and the chair of the
House Financial Services Committee
The United States House Committee on Financial Services, also referred to as the House Banking Committee and previously known as the Committee on Banking and Currency, is the committee of the United States House of Representatives that oversees t ...
's
Subcommittee on Financial Institutions and Consumer Credit. The bill had passed 312 to 112 but was never given a vote in the Senate.
In the
111th United States Congress
The 111th United States Congress was a meeting of the legislative branch of the United States federal government from January 3, 2009, until January 3, 2011. It began during the last weeks of the George W. Bush administration, with th ...
, the bill was reintroduced as and on April 30, 2009, the House passed 357 yes votes to 70 no votes. The Senate followed suit and passed an amended version on May 19 with 90 yes votes and 5 no votes. The House passed the amended bill the next day by a vote of 279 to 147 and it was signed into law by President
Barack Obama
Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the ...
on May 22, 2009.
The bill went into effect on February 22, 2010, nine months after it was enacted.
Provisions
The Credit Cardholders' Bill of Rights includes several provisions aimed at limiting how credit card companies can charge consumers but does not include
price control
Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of good ...
s, rate caps, or fee settings.
Key provisions include:
* Giving consumers enough time to pay their bills. Credit card companies have to give consumers at least 21 days to pay from the time the bill is mailed. Credit card companies can not "trap" consumers by setting payment deadlines on the weekend or in the middle of the day, or changing their payment deadlines each month. Creditors may not charge late fees if debtor shows proof of payment by close of business on the due date. If the established due date falls upon a Saturday, Sunday, or legal banking holiday, the due date is pushed back to the next business day.
* No retroactive rate increases. Credit card companies must give consumers at least 45 days notice if their rates are about to go up, and can not change any terms of the contract within a year. Low introductory rates must last at least six months.
* Easier to pay down debt. Credit card companies must apply payment amounts "in excess of the minimum payment amount" to a consumer's highest interest rate balances first. Statements must show consumers how long it would take to pay off their existing balance if the consumer made only the minimum payment, and must show the payment amount and total interest cost to pay off the entire balance in 36 months.
* Eliminates "fee harvester cards." The Act contains a provision that limits the first year annual fee for a credit card to 25% of the credit limit. Credit card issuers are still able to charge certain additional fees, such as "setup fees" or "program fees." The Act also restricts the fees that can be charged for gift cards and other prepaid cards.
* Eliminates excessive marketing to young adults. Consumers under the age of 21 must prove that they have an independent income or get a co-signer before applying for a credit card. The Act also prevents credit card companies from mailing offers to consumers under 21 unless they "opt in," and prohibits companies from wooing students with T-shirts, free pizza and other free gifts at university-sponsored events.
Amendment on guns in national parks
Gun rights
The right to keep and bear arms (often referred to as the right to bear arms) is a right for people to possess weapons (arms) for the preservation of life, liberty, and property. The purpose of gun rights is for self-defense, including securi ...
advocates in the Senate, led by
Tom Coburn
Thomas Allen Coburn (March 14, 1948 – March 28, 2020) was an American politician and physician who served as a United States senator for Oklahoma from 2005, until his resignation in 2015. A Republican, he previously served as a United St ...
(R-Okla) added an
unrelated rider to the bill to prevent the
Secretary of the Interior from enforcing any regulation that would prohibit an individual from possessing a firearm in any unit of the
National Park System
The National Park Service (NPS) is an agency of the United States federal government within the U.S. Department of the Interior that manages all national parks, most national monuments, and other natural, historical, and recreational propertie ...
or the
National Wildlife Refuge System. The Senate passed the amendment 67–29.
This amendment overturns a Reagan-era policy prohibiting firearms from being carried in national parks. The
George W. Bush
George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...
administration had attempted to implement a similar policy through the rulemaking process just before leaving office, but the change was struck down by a federal judge. The provision has been heavily criticized by some environmentalists and
gun control advocates, but it was heavily applauded by
gun rights
The right to keep and bear arms (often referred to as the right to bear arms) is a right for people to possess weapons (arms) for the preservation of life, liberty, and property. The purpose of gun rights is for self-defense, including securi ...
groups.
Effects
![Elizabeth Warren keynote speech Feb 22 2011 on CARD Act](https://upload.wikimedia.org/wikipedia/commons/7/75/Elizabeth_Warren_keynote_speech_Feb_22_2011_on_CARD_Act.jpg)
The act was not expected to affect existing credit card contracts. However, the act that was passed applies to contracts made in the past by setting an effective date of February 22, 2010, which gave banks time to prepare and notify their customers. The
Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mo ...
in its October 2013 report on the CARD Act found that between the first quarter of 2009 and December 2012, credit card interest rates increased on average from 16.2% to 18.5%, while the “total cost of credit,” that is, the total of all fees and interest paid by all consumers as a percentage of the average cycle-ending balance, decreased by two hundred basis points (2.00%). The CFPB made no judgment on the extent to which the CARD Act contributed to these increases and decreases. However, interest rates on other types of consumer credit increased. The CFPB in its study also found that consumers paid less in late payment and over-the-limit fees since passage of the CARD Act. In contrast, studies by
CardHub.com
WalletHub (formerly CardHub.com) is a personal finance website that was launched in August 2013. It is based in Miami and owned by Evolution Finance, Inc.
WalletHub offers free consumer tools, such as its WalletLiteracy Quiz and its Financial ...
and the
Center for Responsible Lending argued that interest rate trends were the result of economic pressures typical of a recession and not the law. According to these studies, historical economic data shows that the interest rate increase and decline in available credit seen during the Great Recession should have been worse considering the widespread unemployment, credit card delinquency and credit card charge-offs.
Section 502(a) of the CARD Act requires a review of the consumer credit card market to be undertaken every two years. In February 2013 letter to the
Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mo ...
as part of the review, the
American Bankers Association
The American Bankers Association (ABA) is a Washington, D.C.-based trade association for the U.S. banking industry, founded in 1875. They lobby for banks of all sizes and charters, including community banks, regional and money center banks, sav ...
wrote that "the CARD Act has provided clear and significant benefits to consumers" but "there have also been significant tradeoffs, specifically, higher costs and less availability for credit card credit."
The American Bankers Association, in its letter responding to the CFPB's request for information on the impact of the act, argued that following the implementation of the CARD Act and associated regulations, "average credit card interest rates have increased and credit card credit is less available, especially to subprime borrowers" and "credit card debt has decreased at a higher rate than other consumer debt and has decreased as a percent of disposable income as non‐revolving debt as a percent of disposable income has increased."
A study published in the ''
Quarterly Journal of Economics
''The Quarterly Journal of Economics'' is a peer-reviewed academic journal published by the Oxford University Press for the Harvard University Department of Economics. Its current editors-in-chief are Robert J. Barro, Lawrence F. Katz, Nathan ...
'' in 2014 (by
Neale Mahoney of the
University of Chicago
The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private university, private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park, Chicago, Hyde Park neighborhood. The University of Chic ...
, Sumit Agarwal of the
National University of Singapore, Souphala Chomsisengphet of the
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all natio ...
and Johannes Stroebel of the
New York University Stern School of Business
The New York University Leonard N. Stern School of Business (commonly referred to as NYU Stern, The Stern School of Business, or simply Stern) is the business school of New York University, a private research university based in New York City. I ...
) found that the law was saving American consumers $11.9 billion a year, and particularly decreased costs for borrowers with poor credit. The researchers further found "no evidence of an increase in interest charges or a reduction to access to credit."
In a speech on the one-year anniversary of the CARD Act, then-CFPB Special Adviser
Elizabeth Warren
Elizabeth Ann Warren ( née Herring; born June 22, 1949) is an American politician and former law professor who is the senior United States senator from Massachusetts, serving since 2013. A member of the Democratic Party and regarded as a ...
said that "much of the
redit card
Reddit (; stylized in all lowercase as reddit) is an American social news aggregation, content rating, and discussion website. Registered users (commonly referred to as "Redditors") submit content to the site such as links, text posts, images ...
industry has gone further than the law requires in curbing re-pricing and overlimit fees." However, she said there was still much work to be done, that the
Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mo ...
's "next challenges will be about further clarifying price and risks and making it easier for consumers to make direct product comparisons."
In 2012, many stay-at-home spouses complained that because they have no individual income, the act prevented them from acquiring credit cards without their husbands' permission. On April 29, 2013, the CFPB amended regulations to allow credit card issuers to consider third-party income for applicants who are 21 or older, if the applicant has a reasonable expectation of access to it.
Sponsors and cosponsors
The bill was cosponsored by
House Financial Services Committee
The United States House Committee on Financial Services, also referred to as the House Banking Committee and previously known as the Committee on Banking and Currency, is the committee of the United States House of Representatives that oversees t ...
chair
Barney Frank
Barnett Frank (born March 31, 1940) is a former American politician. He served as a member of the U.S. House of Representatives from Massachusetts from 1981 to 2013. A Democrat, Frank served as chairman of the House Financial Services Committ ...
and Representatives
Maxine Waters
Maxine Moore Waters (née Carr; born August 15, 1938) is an American politician serving as the U.S. representative for since 1991. The district, numbered as the 29th district from 1991 to 1993 and as the 35th district from 1993 to 2013, inc ...
,
Luis Gutiérrez
Luis Vicente Gutiérrez (born December 10, 1953) is an American politician. He served as the U.S. representative for from 1993 to 2019. From 1986 until his election to Congress, he served as a member of the Chicago City Council representing th ...
,
Stephen Lynch,
Keith Ellison,
Steve Cohen,
Chaka Fattah
Chaka Fattah (born Arthur Davenport; November 21, 1956) is an American politician who served as a Democratic member of the U.S. House for from 1995 to 2016. The district included portions of North Philadelphia, South Philadelphia, and West P ...
,
Maurice Hinchey
Maurice Dunlea Hinchey (October 27, 1938 – November 22, 2017) was an American politician who served as a U.S. Representative from New York and was a member of the Democratic Party. He retired at the end of his term in January 2013 after 20 ...
,
Jim Langevin
James R. Langevin ( ; born April 22, 1964) is an American politician serving as the U.S. representative for since 2001. A member of the Democratic Party, he is the first quadriplegic to serve in Congress; Langevin was appointed to be the first ...
,
Jerrold Nadler
Jerrold Lewis Nadler (; born June 13, 1947) is an American lawyer and politician who since 2013 has served as the U.S. representative for , which includes Manhattan's west side and parts of Brooklyn. A member of the Democratic Party, he is in ...
,
Carol Shea-Porter,
Hilda Solis
Hilda Lucia Solis (; born October 20, 1957) is an American politician and a member of the Los Angeles County Board of Supervisors for the 1st district. Solis previously served as the 25th United States Secretary of Labor from 2009 to 2013, as par ...
,
Peter Welch
Peter Francis Welch (born May 2, 1947) is an American lawyer and politician who is a United States senator-elect from Vermont, and the current U.S. representative for since 2007. A member of the Democratic Party, he has been a major figure i ...
,
Albert Wynn
Albert Russell Wynn (born September 10, 1951) is an American lobbyist and former politician who served as a member of the United States House of Representatives, representing the 4th district of Maryland from 1993 to 2008. On February 13, 2008, ...
,
Peter DeFazio
Peter Anthony DeFazio (; born May 27, 1947) is an American politician serving as the U.S. representative for , serving since 1987. He is a member of the Democratic Party. The district includes Eugene, Springfield, Corvallis, Roseburg, Coos B ...
,
Charles Gonzalez,
Gene Taylor,
David Obey
David Ross Obey ( ; born October 3, 1938) is an American lobbyist and former politician who served as a member of the United States House of Representatives for from 1969 to 2011. The district includes much of the northwestern portion of the st ...
,
Mazie Hirono
Mazie Keiko Hirono (; Japanese name: , ; born November 3, 1947) is an American lawyer and politician serving as the junior United States senator from Hawaii since 2013. A member of the Democratic Party, Hirono previously served as a member of t ...
,
Debbie Wasserman Schultz
Deborah Wasserman Schultz (née Wasserman; born September 27, 1966) is an American politician serving as the U.S. representative from , first elected to Congress in 2004. A member of the Democratic Party, she is a former chair of the Democrat ...
,
Nancy Boyda
Nancy Boyda (born August 2, 1955) is an American chemist and politician. She is a former Democratic U.S. Representative for . On November 4, 2008, Boyda was defeated for re-election to a second term by Kansas State Treasurer Lynn Jenkins.
...
,
John Dingell
John David Dingell Jr. (July 8, 1926 – February 7, 2019) was an American politician who served as a member of the United States House of Representatives from 1955 until 2015. A member of the Democratic Party, he holds the record for longes ...
,
Corrine Brown
Corrine Brown (born November 11, 1946) is an American former politician who served as a member of the U.S. House of Representatives from Florida from 1993 to 2017 and a convicted felon. She is a member of the Democratic Party. After a court-ord ...
,
Bennie Thompson,
Alcee Hastings
Alcee Lamar Hastings ( ; September 5, 1936 – April 6, 2021) was an American politician and judge from the state of Florida.
Hastings was nominated to the United States District Court for the Southern District of Florida by President Jimmy Cart ...
,
Yvette Clarke
Yvette Diane Clarke (born November 21, 1964) is an American politician serving as the U.S. representative for New York's 9th congressional district since 2013. A member of the Democratic Party, she first entered Congress in 2007, representing ...
,
Jesse Jackson,
Danny Davis,
Kirsten Gillibrand
Kirsten Elizabeth Gillibrand (; ; born December 9, 1966) is an American lawyer and politician serving as the junior United States senator from New York since 2009. A member of the Democratic Party, she served as member of the U.S. House of ...
,
Eddie Bernice Johnson
Eddie Bernice Johnson (born December 3, 1935) is an American politician who represents Texas's in the United States House of Representatives. Johnson is a member of the Democratic Party.
Elected in 1992, Johnson was the first registered nurse ...
,
Diane Watson
Diane Edith Watson (born November 12, 1933) is a former American politician who served as US Representative for , serving from 2003 until 2011, after first being elected in the 32nd District in a 2001 special election. She is a member of the Dem ...
,
Michael Arcuri
Michael Angelo Arcuri (born June 11, 1959) is an American politician who was the U.S. representative for from 2007 to 2011. He is a member of the Democratic Party. He lost re-election on November 2, 2010, to Republican Richard L. Hanna.
Arcu ...
,
Eliot Engel
Eliot Lance Engel (; born February 18, 1947) is an American politician who served as a U.S. representative from New York from 1989 to 2021. A member of the Democratic Party, he represented a district covering portions of the north Bronx and s ...
,
John Tierney,
Chris Van Hollen
Christopher Van Hollen Jr. (born January 10, 1959) is an American attorney and politician serving as the junior United States senator from Maryland since 2017. A member of the Democratic Party, Van Hollen served as the U.S. representative ...
,
George Miller,
Jim Moran
James Patrick Moran Jr. (born May 16, 1945) is an American politician who served as the mayor of Alexandria, Virginia from 1985 to 1990, and as the U.S. representative for (including the cities of Falls Church and Alexandria, all of Arlington ...
,
Anthony Weiner,
Neil Abercrombie
Neil Abercrombie (born June 26, 1938) is an American politician who served as the seventh governor of Hawaii from 2010 to 2014. He is a member of the Democratic Party.
Born in Buffalo, New York, Abercrombie is a graduate of Union College and th ...
, and
Jan Schakowsky
Janice Schakowsky ( ; née Danoff; born May 26, 1944) is an American politician who has served as the U.S. representative from since 1999. She is a member of the Democratic Party.
The district is anchored in Chicago's North Side, including ...
.
References
External links
Press ReleaseText of billCARD Act - Actions & Votes
{{authority control
Acts of the 111th United States Congress
Credit cards in the United States
United States federal banking legislation
Consumer protection legislation
2009 in law