The new credit card act does not protect consumers as intended. The Credit Card Accountability, Responsibility and Disclosure Act, known as the CARD Act, are supposed to help and protect consumers from credit card companies taking advantage of people. Despite the changes in the credit card laws, the banks and credit card companies have found ways to charge more than ever. Our views remain that this will do nothing to help the consumer and will only make the banks more money. As a result of the continued abuse by the credit card issuers, debt problems and the increase bankruptcy filings will continue.
The new law was created to stop certain practices of credit card companies. For example, one change is that rate hikes on existing balances on fixed-rate cards are prohibited under most conditions. In addition, card issuers cannot charge additional fees when consumers pay by mail, electronic transfer, online or phone unless the customer requests an expedited payment to avoid a late fee. Credit Card Companies have found ways around the new laws.
Credit Card Companies Will Continue to Use Sneaky Fees to Make Money
Lenders are now starting to put fees in place when they did not before. Prior to the change in the laws, 80% of all credit cards carried no annual fee. The issuers now are charging annually fees and inactivity fees for consumers that do not use the cards for a time period. For example, if you do not use the card for six months, a fee would be put on the card. Balance transfer fees are being increased. Lenders are also charging minimum finance charges so that even if you have next to no balance you would still get hit with a charge that is higher than the actual interest rate on the card.
Many credit card companies now tie the rate to the highest prime rate within a 90 day period. This leaves people in the dark as to what will be charged and of course maximizes the interest rate that the banks or credit card issuer will be able to charge.
Most Consumers generally do not look that closely at cards and the rate changes. This is how many of our clients get into trouble and the debt becomes out of control. The bankruptcy filings in New Jersey and across the nation are on the increase, in large part because credit card debt of consumers has become out of control. Our clients cannot get on top of the debt and the fees begin to multiply, forcing them into a chapter 7 or chapter 13 bankruptcy.
Conclusion
People must take responsibility and cannot totally blame banks for their problems, but the banks and credit card issuers are largely responsible for taking advantage of the consumer and leading to their financial problems. Unlike the banks that have been bailed out by the government, our consumer clients do not get bailed out. Many times bankruptcy becomes the only option.
