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When Bad Things Happen to Good People ...

Bankruptcy May Be Your Option

How the provisions of the CARD Act protects you from creditors

Personal credit cards have become a ubiquitous characteristic of modern American life; something that -- like a smartphone, social media, or Internet access -- many people, especially younger Americans, seemingly cannot comprehend being without.

The availability of credit cards, however, has also meant that many Americans have gotten into trouble with them. In response to these concerns, the federal government passed the Credit Card Accountability, Responsibility, and Disclosure Act – also known as the CARD Act – to alleviate some of these perceived problems.

One of the first effects of the CARD Act has been to create a new agency to administer its provisions. This agency is the Consumer Financial Protection Bureau, or CFPB. By its own measure, the CFPB has brought about changes in four areas:

  • Reducing the previous practice of card issuers raising interest rates on current balances. Card issuers are prohibited from raising such rates unless the cardholder has missed two consecutive payments, and card issuers must give cardholders 45 days to cancel their accounts when interest rate increases are proposed on new purchases.
  • Reducing late fees. Generally, card issuers now cannot charge late fees until they have given cardholders at least 21 days to pay the bill, and any such late fees have now been reduced to $25 for the first violation and $35 for any second violation occurring within the next six months. Card issuers also cannot charge late fees higher than the minimum payment amount.
  • Eliminating over-limit fees. Card issuers now cannot charge over-limit fees unless the cardholder expressly allows them to do so, and cardholders have the right to revoke such consent at any time.
  • Making it easier to understand monthly statements. For example, monthly statements must now state how long it will take to pay off the bill if only minimum payments are made and the total cost to do so, they must also inform the cardholder of how much to pay monthly to pay off the bill in three years.

The CARD Act has reduced some of the problems associated with credit card usage, but if you still find yourself having trouble with credit card debt it may be advisable to seek professional advice -- including that of a lawyer, if necessary -- to help with ways to manage it.

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