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1.2.8 The Credit Card Accountability, Responsibility and Disclosures (CARD) Act

In 2009, Congress enacted the Credit Card Accountability Responsibility and Disclosure Act of 2009 (hereinafter the Credit CARD Act).98 The Credit CARD Act was a response to the enormous public outrage caused by credit card abuses. These abuses included imposing dramatic interest rate increases on already-incurred balances, assessing large penalty fees, often using hair trigger practices, manipulating the methods of calculating interest and crediting payments to maximize interest charges, and aggressive marketing, especially to college students and younger consumers.99 One indicator of the level of public outrage was the record-breaking 60,000-plus public comments received by the Federal Reserve Board in response to an earlier rulemaking in which the FRB proposed to regulate credit card practices under the Federal Trade Commission Act.100

The Credit CARD Act amended TILA to add numerous substantive credit card protections. These include:

  • • A prohibition against increases in the annual percentage rate (APR) applicable to the outstanding balance or during the first year of an account (with some exceptions);
  • • A prohibition on the “double cycle billing” method of calculating interest;
  • • A requirement that penalty fees be reasonable and proportional to the consumer’s transgression;
  • • A requirement that consumers must expressly elect or “opt in” to permitting over-the-limit transactions before the issuer can charge any over-the-limit fees;
  • • A requirement that credit card issuers consider the consumer’s ability to repay the credit extended under an account when granting credit;
  • • Protections for college students and other younger consumers, including a specific requirement that issuers assess ability to repay when the consumer is under twenty-one years of age and restrictions on marketing on college campuses;
  • • Various protections involving payments on a credit card account, such as requirements that creditors promptly post payments and rules regarding how payments must be allocated to different balances;
  • • Protections for subprime credit cards, restricting the fees that can be charged to the account to 25% of the credit line.

The vast majority of the Credit CARD Act provisions became effective by February 22, 2010.101 The FRB issued revisions to Regulation Z to implement the Credit CARD Act, which are discussed at Chapter 6 and Chapter 7, infra.102


  • 98 {98} Pub. L. No. 111-24, 123 Stat. 1736 (May 22, 2009). See also Pub. L. No. 111-93, 123 Stat 2998 (Nov. 6, 2009) (technical corrections to CARD Act).

  • 99 {99} These abuses are discussed in detail in National Consumer Law Center, Consumer Credit Regulation Ch. 8 (2d ed. 2015), updated at

  • 100 {100} H.R. 627, the Credit Cardholders’ Bill of Rights Act of 2009; and H.R. 1456, the Consumer Overdraft Protection Fair Practices Act of 2009: Hearing Before the Subcomm. on Fin. Institutions and Consumer Credit of the H. Comm. of Fin. Serv., 111th Cong. 8 (2009) (testimony of Sandra Braunstein, Director, Division of Consumer and Community Affairs, Federal Reserve Board).

  • 101 {101} Pub. L. No. 111-24, § 3, 123 Stat. 1736 (May 22, 2009).

  • 102 {102} 74 Fed. Reg. 36,077 (July 22, 2009); 75 Fed Reg. 7658 (Feb. 22, 2010); 75 Fed. Reg. 37,526 (June 29, 2010).