Credit CARD Act and Consumers

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This content is provided courtesy of USAA.
Learn about the new protection against unfair rate increases and get a refresher on other credit card law changes
When it comes to consumer protection, the Credit Card Accountability, Responsibility and Disclosure Act of 2009 is a gift that keeps on giving. That’s because aspects of its provisions are still going into effect.

The latest change went into effect Feb. 22, 2011. That’s when the first six-month review of interest rates is due. Previously, your credit card’s annual percentage rate could be raised permanently. Now, credit card issuers can only raise the rates on your future purchases, not on your existing balances. If they raise the rates on your future purchases, they must review their decision every six months to see if your rates should be decreased. If it is determined that your rates should be decreased, they must do so within 45 days of the review. USAA has conducted these reviews and is contacting members who will receive a rate decrease.

There are two exceptions to this review. The requirement doesn’t apply to:

  1. Rate increases made before Jan. 1, 2009.
  2. Rate increases associated with a variable rate, or the expiration of a promotional or temporary rate.

Here’s a refresher on some key protections under the Credit CARD Act that already have been implemented.

What’s Covered Credit CARD Act Rules For USAA Cardholders
Over-limit fees Before you can be charged a fee for exceeding your credit limit, you must tell your credit card company that you want it to allow transactions that will take you over your credit limit. USAA doesn’t charge over-the-limit fees. In some cases, we may allow you to go over your credit limit. If we do, we won’t charge an over-limit fee.
Interest rate floors Card companies can’t set a minimum interest rate, also known as a floor, on a variable rate. Our variable rates don’t have any floors and will adjust up or down with any change in the prime rate.1
Higher rates for late payments Card companies can’t raise your interest rate on existing balances for a late payment unless it’s more than 60 days late. You’ll be given 45 days notice before the higher rate goes into effect. USAA eliminated automatic rate increases for late payments — a voluntary card enhancement that wasn’t required by the new regulation. (Late fees continue to apply to late payments.)
Ability to repay Card issuers can’t approve applications for a new credit card or increase a credit limit on an existing account without considering your ability to make the required minimum payment. This means you may be required to show proof of income before being approved for a credit card.If you’re younger than 21, you are required to submit a written application that demonstrates your ability to make the minimum payment. You may need a co-signer or joint applicant, such as a parent or guardian, willing to accept responsibility for the debt. USAA considers your income and debt before approving a new credit card or increasing credit on an existing card.If you’re younger than 21 when you apply for a credit card, you have to submit a written application that shows you have sufficient income to repay the debt.If you don’t have the income to qualify on your own, you will be given the option to reapply with a qualified joint applicant who is at least 21 years of age.
Card agreements online Credit card agreements must be available on the company’s website, or must be sent or made available to you within 30 days of your request. USAA enhanced its agreements, making them shorter and easier to read, with a separate one-page pricing schedule that details your rates and fees.To access your USAA credit card details, log on to, click on your credit card account on the My Accounts page, and then scroll down to the Account Services section. Under Your Account Documents, you’ll find the list of card agreements.
Penalty fees In general, card issuers can’t charge more than $25 for late and returned payments or over-limit transactions, unless:

  • The cardholder makes repeated violations; or
  • A higher fee reasonably offsets the issuer’s cost of dealing with the violation.

Issuers can charge $25 for the first violation and $35 for repeated violations that occur over six billing cycles.


Late and returned payment fees can’t exceed the amount of your minimum payment shown on your statement. The amount of an over-limit fee cannot exceed the amount by which you exceed your credit limit.

USAA will only charge up to $25 for late and returned payment fees and does not charge the $35 fee allowed for multiple violations. USAA doesn’t charge over-limit fees.
Multiple fees Card companies can only charge one fee for the same transaction during a billing period. For example, they can’t charge both a late and a returned payment fee when a check received after the due date bounces. If you pay late and also bounce a check in the same billing cycle, USAA may charge either a late or returned payment fee, but not both.


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