Today marks the one year anniversary of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, also known as the Credit CARD Act of 2009. This credit card reform legislation focused on establishing fair and transparent practices relating to the extension of credit while removing complicated contracts and practices that often lead consumers to pay more than they reasonably expected. In essence the main elements of this law were the following: Ban Unfair Rate Increases, Prevent Unfair Fee Traps, Plain Sight /Plain Language Disclosures, Accountability, and Protection for Students and Young People. Some of the specific requirements in the Credit CARD Act of 2009 include the following: card companies must notify consumers 45 days before they make any big changes to the terms of their cards, including rate increases or penalty fee changes; and credit card companies must disclose how long it will take consumers to pay off their balances if they only make the minimum payment each month. In addition, it banned most rate increases during the first 12 months after a card is issued to a consumer, confined any increases to new purchases, and required the card companies to apply any payments above the minimum to balances carrying the highest interest rate. Initially there was speculation that this new law may restrict access to consumer credit and raise costs. Fortunately for the consumer, this new law is initially being proved successful in accomplishing its stated goals.
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