NEWS RELEASE
MICHIGAN ATTORNEY GENERAL
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LANSING – As we head into the last full week of Financial Literacy Month, Attorney General Dana Nessel is reissuing her Protections for Credit Cardholders alert to familiarize consumers with the law that protects them from abusive fees, penalties, and sudden interest rate increases.
The Credit Card Accountability Responsibility and Disclosure Act, also known as the CARD Act of 2009, is a comprehensive overhaul of the Truth in Lending Act passed in 1968. The CARD Act was signed into law by President Barack Obama and added several provisions to the earlier legislation with the goal of making the process of obtaining credit and the interest charged for it more transparent.
“Most of us use credit cards in our everyday lives and it is important to know what protections we have when we choose this payment method,” Nessel said. “During Financial Literacy Month, it is fitting that we revisit the protections that the CARD Act provides against unfair practices that were all too common before this law went into effect.”
According to the Consumer Financial Protection Bureau, in the first five years after the CARD Act went into effect, it helped consumers save more than $16 billion in credit card fees. Among the many consumer protections included in the CARD Act are provisions related to:
Credit Interest Rate Increases
- Card companies must give cardholders 45 days advance notice before instituting a rate increase and notify cardholders that they have the right to cancel their card before the increase goes into effect.
- Card companies are prohibited from increasing rates on existing balances for one year after the account is opened. After a year, the rates can only be increased if:
- a promotional rate has expired;
- a rate for a variable-rate card has changed based on circumstances outside the card company’s control, e.g., an increase in rates for U.S. Treasury securities;
- consumer completes or fails to complete temporary hardship arrangements; or
- consumer does not make minimum payment within 60 days.
Payments, Billing & Statements
- Statements must be mailed at least 21 days prior to payment due date.
- When a cardholder makes excess payments, the amount in excess of the minimum payment must be applied to the highest-rate balances first.
- Card companies are prohibited from double-cycle billing. This occurs when credit card interest is calculated to apply to the average of the two prior months’ outstanding balances rather than the most recent billing cycle’s balance.
- Credit card statements must show the amount of interest and fees paid during the current year as well as a warning about the high cost of making only the minimum payment.Payment due dates must be on the same day each month. Card companies must accept and promptly post payments received by 5 p.m. on the due date.
Since its inception, the CARD Act has been empowering consumers to make informed financial decisions. The legislation continues to serve as a critical safeguard in ensuring transparency and fairness in credit card practices. During Financial Literacy Month and beyond, the CARD Act can help us navigate the landscape of credit cards with confidence and knowledge.
For general consumer questions or to file a complaint, you may reach the Attorney General's Consumer Protection Team at:
Consumer Protection Team
P.O. Box 30213
Lansing, MI 48909
517-335-7599
Fax: 517-241-3771
oll-free: 877-765-8388
Online complaint form
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