The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 was lauded by advocates as a Cardholders’ Bill of Rights. Card issuers, on the other hand, likened it to a horrible compliance migraine. Most all would agree conforming to the regulation has required a Herculean effort by financial institutions, compliance teams, and card processors.
Credit unions in general have noted that despite the vast range of provisions affected by the act—statements, disclosures, fees, and account changes—the law ultimately benefits members by making card terms more consistent and easier for them to understand and compare products.
Industry practices: then and now
The law largely went into effect in February 2010. It targeted what regulators called “unfair or deceptive” practices, such as “hair-trigger” penalty interest rate increases on existing balances for minor account violations, unfair payment allocation, and imposition of over-credit-limit fees without consent, according to a Pew Charitable Trusts Safe Credit Cards Project report.
In general, the regulation:
Before the legislation took effect, research showed that 100% of credit cards from the largest banks included the practices the law aimed to abolish. And today, “the elimination of these practices marks a major improvement,” says Nick Bourke, director of the Safe Credit Cards Project and co-author of the Pew report, which evaluated the top 12 bank issuers and the top 12 credit union issuers. Some highlights include: