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What is the CARD act and how does it help consumers?

It's not uncommon for people in Chattanooga to run into financial challenges because of credit card debt. Credit card debt can accumulate in a number of ways. Perhaps there was a frivolous use of credit to buy things that really weren't needed and the irresponsibility led to issues paying the debt. Or, there might have been unexpected events that made it necessary to use a credit card to pay for them and the aftermath is causing a problem paying all the credit cards. Before new rules were implemented, consumers were at the mercy of credit card companies. That changed when the CARD act was enacted.

Consumers need to understand the details of the CARD act. Taking effect in 2009, the law made terms more transparent and easier for people to comprehend. The law provides consumers with a limit on how much interest rates can be raised. This means there are rules when it comes to how the company can choose to raise the rates and when. There is a limit on "universal default." What this means is that the interest rates cannot be raised based on other creditors and the consumer's record in keeping up with those payments or defaulting.

Opting out is now a right. If there are changes to an account's terms, the cardholder is allowed to close the account and pay the balance on the terms as they used to be. The debtor has five years to pay off the debt. Credit is limited for people under the age of 21 and the promotional attempts to market cards have been regulated. People receive more time to pay their bills. The due dates of payments are clearer. Over-limit fees have been limited and late fee restrictions have been capped.

While the CARD act was put into place to help consumers, it doesn't automatically mean that the problems many people face with credit card debt is eliminated. Improved transparency and new laws are fine, but when there are credit card bills that can't be paid, some consumers might not realize they have options to clear their debts and get on better financial footing. One such option is bankruptcy.

Source: CreditCards.com, "What the credit card reform law means to you," accessed on Dec. 21, 2014

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

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