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Learn About the Credit CARD Act of 2009

6 min read

Last Updated: May 28, 2025

Table of contents

Key Takeaways

The 2009 Credit CARD Act regulates credit card issuer practices that help increase transparency and protect consumers.
The CARD Act limits fees and regulates credit card marketing and billing practices.
The CARD Act says that some credit card language must be the same from one credit card company to another—so that consumers can better understand terms and conditions.

In 2009, the United States Congress passed federal legislation called the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act to bolster consumer protection concerning credit cards. It focused on improving creditors’ transparency and minimizing unexpected or unreasonable credit card fees. Its reforms made credit card information more accessible and uniform to help consumers compare credit cards at a glance and make the best financial decision for them.

What is the Credit CARD Act of 2009?

The Credit CARD Act amended the Truth in Lending Act to safeguard borrowers from some creditor practices. Before the legislation, consumers sometimes found credit card terms and conditions confusing, and many people didn’t always understand the rules for fees, interest rate increases, and deadlines. Now, credit card companies must disclose much more information to potential customers in straightforward language across credit card companies.

The Credit CARD Act requires credit card issuers to communicate clearly with existing cardmembers about billing and changes to their accounts.

Understanding what the Credit CARD Act entails may help you choose the best credit card for you.

What does the Credit CARD Act of 2009 do for consumers?

Limited interest rate increases

Before the CARD Act, credit card companies had fewer restrictions on raising interest rates without. Under the CARD Act, your card issuer can’t raise the rate on a card if you've had it for fewer than 12 months. In addition, a credit card company must provide you with a 45-day notice of any interest rate increase. The new rate can only apply to balances going forward (unless you’re late paying your credit card bill by 60 days or more). The good news is that when your card issuer raises your rate because of a 60-day late payment, it must restore the original rate after six months of on-time payments.

Similarly, credit card companies typically can’t increase the annual percentage rate (APR) on accounts until at least a year after their activation. But there are exceptions to this as well. In addition to providing you with advance notice, a credit card company must inform you of your right to cancel before an increase goes into effect.

Improved protection for young people

Young adults may not always understand how to manage a credit card. Common mistakes could have long-term financial consequences.

Restrictions on some fees

Before the CARD Act, borrowers often faced unexpected fees for transactions that exceeded their credit limit. This is comparable to overdraft fees on a checking account. The CARD Act says that customers must opt-in before a credit issuer can charge an over-limit fee. The CARD Act also instituted limits on other types of credit card fees. According to the Consumer Financial Protection Bureau, an annual fee can’t exceed 25% of each card’s initial credit limit during the first year after the account is opened.

Prohibited double-cycle billing

Some creditors used to use a process called double-cycle billing–a way of calculating credit card interest that took the average daily balance of the current month and the previous month. It meant you sometimes could end up paying interest on a debt after already paying it off the previous month. The CARD Act banned the practice altogether.

Regulated deadlines

Without regulations for credit card payment deadlines, your bill due date could fall on different days each month. Following the CARD Act, deadlines must fall on the same date each month (except on holidays). In those cases, the creditor cannot treat a payment received on the next business day as late. Credit card companies also must provide their customers with a monthly credit card statement at least 21 days before their payment is due. That way, a sudden deadline can never surprise you.

Did you know?

The Credit Card Act of 2009 protects consumers from some unexpected fees, but many credit cards still have other fees, such as annual fees, just for using a card. Discover has no annual fee on any of our cards.

Learn More

What doesn’t the CARD Act cover?

Corporate credit accounts

The Credit CARD Act only applies to consumer credit cards.

Deferred interest promotions

Have you seen an advertisement using language like “no interest if paid in full in 12 months”? With deferred interest promotions, customers who don’t pay off their entire balance within a certain period can owe back interest on the whole amount—not just the remaining unpaid balance. That’s where the phrase “if paid in full” comes into play. Cardmembers might find that they owe more than they expect at the end of the promotional period.

Discover does not offer credit cards with deferred interest.

No maximum interest rate

The CARD Act makes strides in improving transparency and communication about interest rate increases. What it doesn’t do is create a general cap on interest rates. Someone with a lower credit score may only qualify for cards with higher interest rates.

Interest rate increases

The CARD Act didn’t prevent credit card issuers from increasing rates. For example, if you’re more than 60 days late on a monthly payment, your issuer might charge an increased “penalty APR” or a higher interest rate on your existing balance.

The bottom line

The 2009 Credit CARD Act works to demystify credit cards’ terms and conditions. This can help consumers make responsible credit decisions, compare credit card options more freely, and avoid some fees. While the act makes it easier to understand terms, it’s still important to conduct careful research before opening a credit card account.

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