Know Your Rights: A Borrower’s Guide To Protections Under The Credit Card Act Of 2009

man holding credit card

Published on March 12th, 2019

The Credit Card Act of 2009 guarantees certain rights to borrowers that protect you from predatory lending practices. You can thank President Obama. Learn more.

The average American has 2.6 credit cards. While convenient, credit cards are a struggle for many people to manage.

The Credit Card Act of 2009 set laws in place that made creditors more accountable when issuing credit cards. Take a look at how the Credit Card Act of 2009 protects borrowers rights.


1. Ability To Pay

Credit Card Fees

One of the most important factors when getting a new credit card is knowing you can repay the debt. With the Credit Card Act of 2009, creditors will no longer pre-approvals to people who cannot prove they have the income to support debt repayment.

If you have low income or poor credit score, you may be limited to cards like surge mastercard that allow you to rebuild your credit over time. The temporary benefit of cards like these is that they have low credit limits which can help borrowers avoid racking up more debt than they can afford to repay.


2. Direct Mail

If you’re under the age of 21, credit card companies won’t mail you card offers unless you opt-in. This takes away the temptation for young people to spend beyond their means. College brings a ton of new expenses and the Credit Card Act aims to protect students from taking desperate measures while in school.


3. Parental Consent

Parents of borrowers under the age of 21 must give consent before a credit bureau distributes their credit report. Underage card applicants must also get a co-signer over the age of 21 when applying for new credit cards.


4. Interest Rates

Boost Your Credit Rating

No longer can interest rates fluctuate by month. Credit card companies now give you a minimum of 60 days before raising your interest rate when you are late. If you can repay your debt on time for six months, the original interest rate is restored.


5. Third Party Penalties

Before 2009, a credit card company could penalize you for default with another lender. Your relationship with the creditor is now the only factor that determines the penalty fees you pay.


6. Prepaid Cards

Though not a traditional credit card, prepaid cards come with fees that create financial woes for some. The new law limits the amount of the fees and also sets limits on how soon a prepaid card or gift card can expire. The card issuers must give you at least five years to use the balance on the card.


7. Statement Delivery

The timely delivery of your statements can affect your ability to pay on time. New laws require credit card companies to issue a statement to you a minimum of 21 days before the due date. If your statement comes late, there is a federal law in place to protect you.

Due dates that fall on holidays or weekends when regular mail does not deliver are pushed to the next business day. The card act restricts floating due dates of any kind.


Benefits Of The Credit Card Act

Credit Card A Boon Or Bane

The best thing about the Credit Card Act of 2009 is that it takes away many fees and penalties that often make credit cards unaffordable. More transparency in interest rates and due dates arm consumers to use credit to their advantage.

For more lifestyle and money tips, visit our website.