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Shortcomings of the Credit Card Accountability, Responsibility, & Disclosure Act

Updated on March 16, 2013

The Credit Card Accountability Act

The government recognized the fact that the credit card industry needed new, stricter regulations to help protect consumers, so they created the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, also known as H.R. 627.  The act became effective in February, 2010.  This act was the first significant credit card reform in history, but did it cover all the issues?  Not exactly.

Jesse Jackson Jr on HR 627

What The Credit Card Act of 2009 Does Cover

H.R. 627 makes it unlawful for a credit card company to raise interest rates without issuing a 45 day warning to the consumer.  It also states that card holders have the right to cancel their credit cards and pay off their outstanding balance when those increases are enacted. 

If a cardholder is in good standing with the company, the company may not retroactively enact  increased interest rates.  The act also prohibits credit card companies from imposing unfair or excessive fees and companies will no longer be allowed to arbitrarily change the agreement they have with the credit card holder. 

Drawbacks of H.R. 627

Like most acts, the CARD act is not perfect and the credit card companies were allowed a lengthy time period after the act was passed and before it went into effect.  Most credit card companies took advantage of that time and hurriedly raised interest rates and took other steps to protect their income, since they stand to lose a significant amount since they will no longer be allowed to collect huge sums in questionable fees.

The act does not prevent card issuers from cancelling cards without prior notice even when the customer is in good standing, leading to many frustrating and embarrassing situations for consumers who were unaware there was any possibility that their card could be canceled for no particular reason.

It is predicted credit card companies will retaliate by adding annual fees to cards that previously had no such fees and that it will become more difficult for consumers to get a card as credit checks become more intense. 

The CARD act is a definite step in the right direction, but it is not perfect.  Millions of people in this country relied on credit for many of their purchases and may now be less inclined or able to obtain cards at an interest rate they deem acceptable. 

This act also comes too late to help many consumers who have been caught up in the economic tidal wave that crashed across the U.S. and they are now drowning in credit card debt.  Bankruptcy has been the only life preserver available to many consumers.

If you are struggling to pay your bills, prevent foreclosure or facing other seemingly insurmountable financial problems, you may benefit from talking to a bankruptcy attorney. Minnesota bankruptcy law is designed to help those who need a fresh financial start. Why not discuss your circumstance with a Minnesota bankruptcy lawyer and see if bankruptcy is an option you should consider.


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