California Consumer Finance Litigation : California Consumer Finance Litigation Lawyer & Attorney : O'Rielly & Roche Law Firm : San Francisco, Oakland, Bay Area, Los Angeles

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President Obama signed the "Credit Card Accountability, Responsibility, and Disclosure (CARD) Act" last week.  The White House issued a fact sheet about the new law, previously known as the "Credit Cardholders' Bill of Rights."

The CARD Act includes significant amendments to Truth in Lending Act provisions related to interest rate increases, fees, and disclosures for credit card accounts.  Highlights of specific provisions of the Act include the following provisions:

• Bans rate increases on existing balances due to "any time, any reason" or "universal default" and severely restricts retroactive rate increases due to late payment.
• Revises disclosure and duration of contract terms for the entirety of the first year: issuers may continue to offer promotional rates with new accounts or during the life of an account, but these rates must be clearly disclosed and last at least 6 months.
• Requires issuers to give card holders at least 21 calendar days from time of mailing to pay a monthly bill.
• Requires issuers to apply excess payments to the highest interest balance first.
• Bans practice by which issuers use the balance in a previous month to calculate interest charges on the current month, so called "double-cycle" billing.
• Requires Opt-In to Over-Limit Fees: issuers will have to obtain a consumer’s permission to process transactions that would place the account over the limit.
• Restricts fees on subprime, low-limit credit cards.
• Revises disclosure on fees for gift and stored value cards and restricts inactivity fees unless the card has been inactive for at least 12 months.
• Revises required disclosures of account terms to consumers before consumers open an account, and on statements of the activity on consumers’ accounts afterwards.
• Requires issuers to show “the consequences to consumers of their credit decisions.”
• Requires issuers to post contracts available on the Internet in a usable format.
• Requires regulators to report annually to the Congress on their enforcement of credit card protections
• Increases penalties on card issuers that violate these new restrictions.
• Requires card issuers and universities to disclose agreements with respect to the marketing or distribution of credit cards to students.