The Credit Card Bailout Myth Busted

The recent economic crisis highlighted many discrepancies in the way credit card companies conducted their business. Statistics have revealed that more than 60 percent of families in United States had credit card debt and a large number of them were struggling to make ends meet. Realizing this, the administration decided to make some amends to the way these companies did business and they devised a new law.

There are some myths surrounding the Credit Card Accountability Responsibility and Disclosure Act of 2009. One of them is that the government will pay your credit card debt or your debt will be forgiven. Nothing could be further from the truth. The act has changed the way credit card companies functioned, but it does not pay or forgive credit card debt.

The Credit Card Accountability Responsibility and Disclosure Act of 2009, also known as the credit card reforms act of 2009 has been widely misinterpreted as a bailout program, which it is not. Following are some of the reforms made to the credit card industry, which are aimed at curtailing spiraling debts.- Credit Card Companies, under the new act, cannot arbitrarily change the rate of interest. Now they have to give at least a 45 days notice to the customers.

The customer also has 3 billing cycles to decline the new rates, without incurring any penalties. Companies have to send the credit statements to the customers, 21 days in advance, so that they have enough time to respond (earlier this time limit was just 14 days). The companies were also required to consider payments made before 1700 EST on the due date, as on-time payments. Under this act, companies are required to have transparent deals. They will have to make their contact details like customer service phone numbers and email IDs readily available.

The reforms also restrict the companies from using ambiguous terms like 'Prime Rate' and 'Fixed Rate'. Card companies cannot charge late payment fees, if the customer has a proof of payment sent at least 7 days before the due date. The reforms also restrict companies from charging exorbitant 'Over the Limit' fees. The new act also intends to prevent double cycle billing, wherein companies charged interest on debt that was paid on time. Reforms made in payment allocation bind the companies to adjust payments made by customers against transactions with high interest rates; for example, cash advances. Under the new act, customers can set their own 'limit' and have a fixed credit limit. This will put curbs on charges levied on crossing the credit limit.

This resulted in a rush of filings before the law's deadline - over 2 million Americans had their debts forgiven that year due to these filings. How Has Average Credit Card Debt In America Changed over The Years, As discussed above, average credit card debt in America has been rising over the last decade. However, despite this, the average percentage of people holding credit card debt has been gradually decreasing. This tells us that the while average credit card debt is increasing, it’s not due to a greater number of individuals spending.

Instead, in recent years, more people have been more heavily indebted. In the year 2000, over half of the households in America had credit card debt. By contrast, in 2001, that figure fell to 38% - over 12 percentage points lower. 7,697. This means the average American today holds 52% more debt today than they did a decade ago.

The process of consolidating personal credit card debt is certainly a learning curve but is probably among the finest things a cardholder can do that will save them money and simplify their payments. If you are considering consolidating credit card debt then there are particular things you should consider first. Of all the reasons and only consolidating credit card debt this is most beneficial is that you are able to get improved interest rates, helping you save heaps of cash.

If you have any cards which may have a lower rate than the rate provided by the new card, you don’t have to include them in your loan consolidation. OK, I want to consolidate all my charge cards what next, Quite simply, go on a spree! There are literally hundreds of Credit card banks nowadays, all offering different premiums and deals.

How do I choose which Card ‘s best for me, Choosing a credit card company for consolidating your personal credit card debt isn’t rocket science. As long since you keep your eye on the interest rates and the ever present fine print, you will know, without any shadow of doubt, which deal is best deal for you.

What if I am in severe personal credit card debt and am struggling to sustain payments, If you have fallen too far into debt and the likelihood is that you will struggle to escape it, it is time to begin looking at getting a debt consolidation loan rather than credit card consolidation agreement.