 TITLE: What Is the Credit CARD Act of 2009? CONTENT: How the Credit CARD Act Protects Consumers\n------------------------------------------\nThe CARD Act includes a wide range of consumer protections, mostly related to interest rates and how they are calculated, fees, disclosures and marketing towards young adults. The law ended these practices:\n**Double-cycle billing**: The CARD Act prohibits a practice called double-cycle billing, an unusual way of calculating interest charges that was unique to the credit card industry. It's hard to imagine now, but before the CARD Act was implemented, credit card issuers would calculate your interest charges based on the average daily balance of your previous two billing cycles. As a result, cardholders were often paying interest on charges that they had already paid off. Today, credit card issuers must calculate interest based on an account's average daily balance during just the previous billing cycle.\n**Interest rate increases at will**: Before the law went into effect, card issuers could raise your rate without reason and not even notify you ahead of time. Under the CARD Act, interest rate hikes on existing balances are largely prohibited, except in instances where rates vary with the prime rate, penalty rates are charged for late payments, or the promotional rates expire. But the law allows you to opt out of any changes made to your credit card, and lets you pay off your existing balance under the previous terms over as long as five years.\nThe law also banned a practice called universal default, in which a card issuer raised interest rates in response to a late payment reported by an unrelated creditor. And it requires credit card issuers to apply payments to the high interest balances first in cases where a consumer has more than one interest rate on an account.\n**Unfair fees**: Before the CARD Act took effect, credit card issuers could approve your request to spend over your limit—then slap you with an over-the-limit fee for doing so. No more. In addition, under the law late fees are capped at $25 for an occasional late payment (but they can rise for repeated late payments). Also, subprime card issuers can't impose account opening fees that are greater than 25% of the available credit limit.\nIn addition to limiting unfair lending practices, the CARD Act created new consumer protections:\n**Help managing accounts**: The CARD Act requires card issuers to make disclosures that can help consumers manage their accounts. For example, statements must include information on how long it will take to pay off a balance if only the minimum payment is made each month. Also, card issuers have to give consumers at least 21 days to make payments after their statement closes. The due date has to be on the same day of the month, every month and payments received before 5:00 p.m. on the due date must be credited to the account on that day.\n**Special protections for students and young people**: The CARD Act prohibits issuers from granting new accounts to anyone under 21 years of age unless they have either an adult cosigner or they can show proof that they can repay their credit card debt. The law also requires credit card issuers to remain at least 1,000 feet away from college campuses if they are offering any type of gift to students in exchange for completing a credit card application. END