Posted on May 23, 2009 by by jr

President Obama has signed the US Credit Card Accountability, Responsibility and Disclosure (CARD) Act making it law.

The new Act brings several significant protection and advantages for US consumers with regard to credit provision (details via multiple sources):

• Interest rates can’t be raised during the first year of an account
• Customers will be notified 45 days in advance of any change in interest rates
• Bills can be paid online or over the phone without incurring a processing fee
• Customers must be over 60 days late on payments before their interest rate can be raised on balances; if the rate is raised, it will go back to the lower rate if customers make the minimum payment on time for six months in a row.
• Overlimit fees can’t be charged unless cardholders are told that the purchase will put them over their limit and they authorize it to go through anyway
• If your card has more than one interest rate on balances, then payments must be applied to the highest interest rate first
• Gift cards can’t expire for five years, and issuers can’t charge dormancy fees for unused amounts left on the card
• Credit card statements must be mailed out 21 days before they’re due
• Individuals under 21 will need a co-signer on their cards unless they can prove that they have the means to make payments on their own
• Credit card agreements will have to be posted on the internet

Whilst most of those reforms simply catch up (and in some respects exceed) the current regulations we have here in Australia there is no doubt that this is sensible reform especially in a tight financial market. Perhaps in the current context of calls for local (Australian) banking reform similar regulations might be considered here.

Interestingly there is another aspect to the CARD Act that seems to have received far less coverage and in some respects is a highly significant step forward and something that ought to be applied here in Australia to all contract, terms and conditions and advertising in general -

via Kottke.org:

The House throws in what ought to be called “The Fine Print Rule.” Card companies must print their account applications and disclosures in 12-point type or greater. A supervisory board will also probably declare certain hard-on-the-eyes fonts off limits. The Senate is silent on typeface but imposes many other communication requirements.

From the bill itself:

SEC. 14. Readability requirement.

Section 122 of the Truth in Lending Act (U.S.C. 1632) is amended by adding at the end the following new subsection:

“(d) Minimum type-size and font requirement for credit card applications and disclosures. -All written information, provisions, and terms in or on any application, solicitation, contract, or agreement for any credit card account under an open end consumer credit plan, and all written information included in or on any disclosure required under this chapter with respect to any such account, shall appear-

“(1) in not less than 12-point type; and

“(2) in any font other than a font which the Board has designated, in regulations under this section, as a font that inhibits readability.”.

Tweet