According to New York Associated Press, credit card statements are going to shock the nation. This anticipated credit card law has sent interest rates up and credit lines down. This may have been a true wake up call for many individuals swimming in credit card debt. The new “Credit Card Accountability Responsibility and Disclosure Act” has taken effect Monday February 22nd.
Credit Card Reform Details
For years, people have been taking out loan after loan, causing themselves piles of credit card debt, that they just afford to pay off. Just barely paying the minimum is what most individuals have been doing, causing them to spend most of their payments on interest alone. Some believe it’s not only the consumers that were at fault for their careless financial behavior, as it was just as much the companies’ responsibility, as they carelessly approved loan after loan for applicants’ which couldn’t afford the debt to ratio.This has without doubt, contributed to the sudden decline in our economic status.
The Damage Done During 9 Months Before Credit Card Law
During the year of 2009, credit card companies started to raise the interest rates, all while changing and adding new fees to people’s original agreements. In addition to these changes, people were seeing a sudden decrease in their credit lines, as well. Some just couldn’t handle the changes and stopped paying their bills all together. This forced credit card companies to have to close down many accounts.
So why did this happen to our consumers’ some ask? In May of 2009, Barack Obama signed a law, which protected credit card users from sudden increasing interest rates and unnecessary fees, which companies used to bring in more profits. According to the Pew Charitable Trust, it was said that consumers will be saving approximately $10 billion, just on interest rates alone.
However, there was a fine catch involved, credit card companies were given nine full months to prepare, as the Federal Reserve took time to elucidate the rules. During this time, the companies had taken drastic measures, which resulted in hurting those consumers, which were supposed to be protected. So, while consumers have mixed feelings about President Barack Obama’s signed law, the effects have already taken place.
The New Credit Card Accountability Responsibility and Disclosure Act
The new Credit Card Accountability Responsibility and Disclosure Act is officially in effect and is requiring credit card companies to give notice to their consumers before changing any original agreements. The new credit card law will also protect consumers by allowing them the decision to accept any new terms and conditions, or deny them, by agreeing to pay off the card with the original terms, within 5 years.