Consumer Options and the Credit Card Act

Recently, we’ve been getting such friendly notices in the mail from our credit card companies. They’re all about the new, wonderful programs and rates being offered. We can now pay off smaller purchases interest-free on a monthly basis and simply accrue interest on more major purchases, we will be receiving statements sooner, and our payment due date won’t change. Aren’t they, generous, thoughtful, and all about us?

Naturally, none of these notices mention that the credit card companies are simply reacting to the new Credit Card Accountability Act (Credit CARD). Signed into law on May 22, the provisions of the act will generally go into effect next February. The law is meant to protect consumers from the most egregious practices of the credit card industry.

For some consumers, the provisions will be too little, too late. If they are already way in over their heads and over their means, contacting a Phoenix bankruptcy attorney may still be the best route to take. For others, the law brings welcome relief. The first stage of relief is a ban on retroactive rate increases. Credit issuers can only punish borrowers for late payments of 60 days or more on the given card, not on unrelated accounts.

If late payments do trigger an increased rate, on-time payments for six months will restore the lower rate. However, it’s still important to read all notifications from your credit card company, as they are allowed to raise rates with 45 days’ notice. Unfortunately, there is still no cap on interest rates, so someone who’s teetering on the brink of a Phoenix bankruptcy, paying late as he or she tries to keep up with bills, may still be tipped over the edge by such increases.

Of course, banks are in the credit industry to make money. Once the CARD act was passed, many issuers raised rates or changed them from fixed to variable before the new law went into effect. But the act may force them to become friendlier to consumers.

The use of debit cards, too, has helped consumers pay down much of their revolving debt. In these days of economic uncertainty, if banks can work with cardholders to manage their debt rather than defaulting on it, perhaps we will have fewer who find it necessary to declare Phoenix bankruptcy. For those who do, it’s good to know that some laws are finally being passed to look out for the little guy.