The Credit CARD Act — formally the Credit Card Accountability Responsibility and Disclosure Act of 2009 — is a federal consumer protection law that limits how credit card companies can raise interest rates, charge fees, bill customers, and market their products. Signed on May 22, 2009, it amended the Truth in Lending Act to curb practices Congress viewed as deceptive or unfair.1Legal Information Institute (LII). Credit Card Accountability Responsibility and Disclosure Act of 2009 Its rules reach interest rate hikes, late fees, billing timelines, payment allocation, statement disclosures, marketing to college students, and even gift card expiration dates.
Interest Rate Rules
Your card issuer must send you written notice at least 45 days before raising your interest rate or making other significant changes to your account terms.2Office of the Law Revision Counsel. 15 USC 1637 – Open End Consumer Credit Plans During the first year after you open an account, the issuer generally cannot increase the annual percentage rate at all. Promotional rates must last at least six months before they can change.
Rate increases generally cannot be applied to your existing balance. A higher rate applies only to new purchases made after the notice period ends. Two exceptions permit retroactive increases: you fall more than 60 days behind on a payment, or your card carries a variable rate tied to an index that moves. Even after a 60-day delinquency triggers a rate hike, the issuer must lower the rate back down within six months if you make on-time minimum payments during that window.3Office of the Law Revision Counsel. 15 USC 1666i-1 – Limits on Interest Rate, Fee, and Finance Charge Increases Applicable to Outstanding Balances
Your Right to Reject a Rate Increase
The 45-day notice must explain your right to cancel the account before the increase takes effect. If you cancel, the issuer cannot treat the closure as a default, demand immediate full repayment, or impose penalties for closing. You keep the right to pay off the remaining balance under terms no worse than what you had before.2Office of the Law Revision Counsel. 15 USC 1637 – Open End Consumer Credit Plans
Limits on Fees and Penalties
Late fees must be reasonable and proportional. Federal safe-harbor amounts let a card issuer charge up to $32 for the first late payment and up to $43 for another late payment of the same type within the next six billing cycles.4eCFR. 12 CFR 1026.52 – Limitations on Fees These figures adjust annually for inflation. The Consumer Financial Protection Bureau finalized a rule in 2024 that would have cut the cap to $8, but a federal court struck it down in 2025, leaving the higher amounts in force.
An issuer cannot charge you an over-the-limit fee unless you have opted into an over-the-limit program in advance. Without that consent, the issuer simply declines transactions that exceed your credit limit. You can revoke consent at any time.5Consumer Financial Protection Bureau. Section 1026.56 – Requirements for Over-the-Limit Transactions
The law also banned double-cycle billing, which had let issuers calculate interest on your average balance across two consecutive billing cycles instead of just the current one. Interest can now only be charged on the balance remaining in the current cycle. For high-fee cards, sometimes called subprime or fee-harvester cards, total fees charged during the first year (excluding late fees, over-the-limit fees, and returned-payment fees) cannot exceed 25 percent of the card’s initial credit limit.2Office of the Law Revision Counsel. 15 USC 1637 – Open End Consumer Credit Plans
Billing and Payment Standards
Your statement must be mailed or delivered at least 21 days before the payment due date. This applies to paper and electronic statements alike; if you’re on paperless billing, the 21-day clock starts when the statement is delivered electronically.6Office of the Law Revision Counsel. 15 USC 1666b – Timing of Payments7eCFR. 12 CFR 1026.5 – General Disclosure Requirements The due date must fall on the same calendar day each month. If that day is a weekend or a holiday when the issuer doesn’t process payments, a payment received the next business day counts as on-time.
How Payments Are Applied
If you carry balances at different interest rates, the way your payment is split matters. Any amount you pay above the minimum must go first to the balance with the highest rate, then to the next-highest, and so on.8Office of the Law Revision Counsel. 15 USC 1666c – Prompt and Fair Crediting of Payments Before the law, many issuers applied extra payments to the lowest-rate balance, keeping expensive debt in place longer.
A separate rule covers deferred-interest promotions, the “no interest if paid in full” offers common at retail stores. During the last two billing cycles before the promotional period expires, the issuer must direct your entire excess payment to the deferred-interest balance so you’re less likely to get hit with retroactive interest on the full original purchase price.8Office of the Law Revision Counsel. 15 USC 1666c – Prompt and Fair Crediting of Payments
What Must Appear on Your Statement
Every monthly statement includes a minimum payment warning that shows how long it would take, and how much interest you’d pay, if you made only the minimum each month with no new charges.1Legal Information Institute (LII). Credit Card Accountability Responsibility and Disclosure Act of 2009 It must also show the payment needed to clear the balance in 36 months and the total cost including interest over that period.
Statements must display the total interest and fees charged so far in the current calendar year, giving you a running total of what carrying a balance is costing. If your account has a deferred-interest promotion, the statement must prominently show the date by which you need to pay off that balance to avoid retroactive interest.9eCFR. 12 CFR 1026.7 – Periodic Statement
Protections for Young Adults
Anyone under 21 who applies for a credit card must either show proof of independent income sufficient to make the required payments, or have a cosigner who is at least 21 and financially able to cover the debt. When a parent, guardian, or spouse cosigns, the issuer cannot increase the credit limit without the cosigner’s written approval.2Office of the Law Revision Counsel. 15 USC 1637 – Open End Consumer Credit Plans
Issuers cannot offer gifts such as T-shirts, gift cards, or magazine subscriptions to persuade students to apply on or near a college campus or at campus-affiliated events. “Near” a campus means within 1,000 feet of its border. Schools that have marketing agreements with card issuers must publicly disclose those contracts.10Consumer Financial Protection Bureau. Section 1026.57 – Reporting and Marketing Rules for College Student Open-End Credit
Ability-to-Pay Rule for Every Applicant
A broader ability-to-pay standard applies to every consumer, not just those under 21. Before opening any credit card account or increasing a credit limit, the issuer must evaluate whether you can afford the required minimum payments based on your income or assets and your existing debts.11eCFR. 12 CFR 1026.51 – Ability to Pay Skipping that review, or approving a card for someone with no income or assets, violates federal regulations.
Gift Card and Prepaid Card Rules
The law also covers gift cards, store gift cards, and general-use prepaid cards. Funds on a gift card cannot expire sooner than five years after the card was issued or last loaded with money.12Office of the Law Revision Counsel. 15 USC 1693l-1 – General-Use Prepaid Cards, Gift Certificates, and Store Gift Cards
Dormancy and inactivity fees are limited. They can only be charged if the card has had no activity for at least 12 months, and no more than one such fee can be charged per month.12Office of the Law Revision Counsel. 15 USC 1693l-1 – General-Use Prepaid Cards, Gift Certificates, and Store Gift Cards The card must clearly state whether such fees exist, how much they are, and how often they can be charged, and the seller must inform you of any fees before you buy.
What the Law Does Not Cover
These protections apply only to consumer credit cards, meaning cards issued for personal, family, or household use. Business credit cards are largely exempt. Business cardholders generally don’t get the advance notice of rate increases, payment allocation rules, or fee limitations described above.13Consumer Financial Protection Bureau. Comment for 1026.3 – Exempt Transactions The only consumer protections that carry over are rules on unauthorized card issuance and limits on liability for unauthorized charges. If you use a business card for personal spending, the consumer rules typically don’t follow.
The law also doesn’t cap how high your interest rate can go. It regulates when and how issuers can raise rates but sets no maximum. Interest rate ceilings come from state usury laws, and those vary widely. Most large national banks are chartered in states with permissive or no usury caps, which is why credit card rates can exceed 25 or 30 percent regardless of where you live.
How to File a Complaint
If you believe a card issuer has violated any of these protections, submit a complaint to the Consumer Financial Protection Bureau at consumerfinance.gov/complaint. The CFPB enforces the law’s provisions under Regulation Z, and complaints feed both individual dispute resolution and the agency’s identification of industry-wide patterns.