What Does the Credit CARD Act Mean for You?

      

              The intention of a new law that went into effect in February of this year is to protect consumers from unfair credit card billing practices. This law, known as the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act for short), also sets restrictions on the availability of credit cards for people under the age of 21 and prohibits the marketing of credit cards on college campuses.      

                Credit card companies must now give customers a 45-day notice of any significant changes to their accounts, such as interest rate increases or increases in annual fees or late fees. Credit card companies must also give you the option to cancel your card before such changes take effect. Your monthly credit card bill must now be mailed at least 21 days before payment is due and must now have a consistent due date month to month. Credit card companies must also now include information about how long it will take you to pay off your balance if you make only minimum payments and how much you would need to pay each month to pay off your balance in three years.  

            Under the new rules, for the first year after you open your account, credit card companies cannot raise your interest rate, and after the first year, interest rate increases can apply only to new charges.  In addition, when balances have multiple interest rates, any payment above the minimum payment required must generally be applied to the balance with the highest interest rate. Under the changes, if you make a transaction that would take you over your credit limit, your credit card company must turn it down unless you have told them to allow such transactions.

            Critics of the new rules say there are many loopholes in this act. For instance, the rules about rates apply only to fixed-rate cards and not to the variable-rate cards that make up the bulk of all credit cards. For many of the benefits this act provides to consumers, Credit card companies have found a way to circumvent many of the  benefits this act provides. ABC News recently made Credit CARD Act loopholes the subject of a news segment.

            Still, there are many bright spots. Bills must be mailed 21 days before they are due. Due dates must be consistent, and companies must tell you how long it will take you to pay off your balance.

            Test your knowledge of the Credit CARD Act here.
            

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This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely responsible for verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over time. The content of this blog may not be construed as legal, medical, business, or personal advice.

           
            

Drowning in Debt?

     Just how much do we owe? According to a recent study published by MSN Money, around 43 percent of American families spend more than they earn each year, average households carry some $8,000 in credit card debt, 28 percent of Americans say that their ability to pay off their credit card debt has become more difficult, and personal bankruptcies have doubled in the past decade. American consumers owe nearly $2.42 trillion dollars according to statistics on consumer credit from the Federal Reserve. That’s about $18,654 per household, a figure that doesn’t include mortgage debt. 
      The good news is our use of credit cards has declined in recent years, perhaps due to the sobering effect of the economic downturn. More households now report that they do not use credit cards.  

      That good news doesn’t extend to students, however. According to creditcards.com, a whopping eighty-four percent of the student population overall have credit cards, an increase of approximately 11 percent since the fall of 2004.

      Robert Manning, author of Credit Card Nation, wrote in a January 2010 Washington Post article that, unlike during the Great Depression, Americans today are more dependent on credit than on savings. Perhaps the current economic crisis will serve as a wakeup call for this generation to get its financial house in order.

      It is my hope that this blog can help to illuminate issues surrounding credit and debt and create a dialog around these issues. According to a survey done by creditcards.com card.com, credit card debt is the new taboo topic. Let’s break that silence and take a look at some topics that may help to shed some light on how we became a nation of borrowers and what we can do about it.

 And now.............a little debt humor.

Please click here to go to the quiz of the week, "Do you really know your credit card?"

Please scroll down to the bottom of the page below the comments section and vote in the poll. I plan to create reader polls from time to time. I will publish the results of polls after the deadline for voting in the poll has passed.

                                  

This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely responsible for verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over time. The content of this blog may not be construed as legal, medical, business, or personal advice.