New Credit Card Laws

Beverly Blair Harzog reports that The Credit CARD Act was a step in the right direction, but it may not have been the solution that some people thought it was.  She indicates that we all have a little more consumer protections than we did before.  But as we’ve seen too often, when Washington tries to fix our problems, the legislation gets watered down to the point where the language is, well, wishy-washy at best.  

Many consumers think that the law protects them against rate hikes.  You are only protected during the first year of a new account, with limited exceptions.  You rate on the card can increase “significantly” on your future purchases as long as you are given 45 days notices although the CARD Act prohibits retroactive rate increases on existing balances.

Also, if you are more than 60 days late on a payment, the penalty rate kicks in.  A recent study showed the median penalty rate is 29.99%  In other words, if you fell behind two months on a card that had a $15,000 balance, the annual interest that you would be charged would be approximately $4,500!

There are now also added fees.  The card issuers have lost revenue due to the legislation, so it was predictable that added fees would be part of the “unintended consequences” that accompanies this kind of law.  There are annual fees, over-the-limit fees, and foreign transaction fees if you use the card abroad.

Many of these fees make the credit card bills unaffordable, so consumers seek debt relief and their options for debt settlement and bankruptcy.