The Credit Card Accountability Responsibility and Disclosure Act of 2009

The Credit Card Accountability Responsibility and Disclosure Act of 2009 is a federal law that was passed by the United States Congress and signed by President Barack Obama on May 22, 2009. It’s comprehensive credit card reform legislation that aims to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes.

The law limits when credit card interest rates can be increased on existing balances and allows consumers whose interest rates have been increased to reduce their annual percentage rates (APRs) to previous levels if they've been good and paid their bills on time for six months.

CARD Act: Provisions that are currently in effect

• Companies must notify you 45 days before raising your interest rates.
• You can cancel your card and pay off the existing balance at the original rate.
• You get 21 days to make a payment after a bill is delivered instead of 14 days.
• Credit cards cannot raise rates on any existing balances. If your rate increases, it will only apply to new charges.
• Payments will be applied to the balance with the highest interest rate first.
• Penalty rates on existing balances can only be applied if your payment is 60 days late. If you then remain in good standing, your rate must go back down after six months.
• Promotional rates must last at least six months.

CARD Act: Provisions that go into effect Aug. 22

• Any penalty fees or rates must be "reasonable and proportional," as defined by the Federal Reserve.