Credit Card Debt

Due to the burgeoning credit card debt over the last 5 years and the part that the credit card companies had in encouraging that debt, the Credit Card Accountability, Responsibility And disclosure Act was recently signed into law.

Nearly every adult in the U.S. has a credit card. In order to do some things, such as renting a car, it is almost impossible to do without a credit card.

Just about 50% of all people with credit cards carry a balance on their cards. And, according to studies, 20% of those have credit cards charging them 20% interest or more.

In fact the credit card debt for many families has become so great that they are considering solutions such as hiring a debt settlement attorney, signing up with a debt consolidation program, or in some cases, even considering bankruptcy.

Credit cards were originally meant to make life easier on the consumer. It freed him from having to always carry cash around. It enabled him to buy items and take possession of them immediately instead of having the store put them in "will call" for later pick up. Credit cards also help many families in emergencies where they needed cash right away for a hospital bill or to buy food and maybe they were out of a job that week. For many years now, credit cards have been the main driving force behind a growing economy.

At some point along the way, however, credit card companies begin to see their customers not as individuals and valued customers, but as cash cows and profit centers. So, slowly over a number of years, small but significant changes begin to take place in the credit market and credit card companies begin to think differently.

If a customer's payment arrived one day late, why not charge a $20 or $30 late fee. If the cardholder went $5 over their credit card limit, let' s not refuse it. Instead why not charge a $30 or $40 over limit fee. And let's offer zero percent interest credit card, but in small legal sized print, lets raise the rate to 21 percent after an "introductory period." And lets do a lot of other things as well. And as a result, profits rose to record height and bonuses were off the chart.

In an effort to protect consumers, consumer advocates have been fighting for this type of legislation for decades. The law will help to prevent a lot of those "mysterious" fees that begin to appear on credit cards in the last 7 or 8 years. Other changes are mandated as well.

The statements that companies send out will be changed by this law. Now, in addition to showing your current balance, it will have to show you how long it will take to pay off that balance if you were to only pay the minimum each month. In addition, credit card companies will no longer be able to implement retroactive rate hikes. Each credit card company will also have to place a copy of its credit card agreements on the Internet where it can be read by consumers at any time. It also stops the shifting of payment dates, something that enabled a lot of companies to make millions of dollars. And it does more.

Hopefully these changes will help a lot of people start the process of getting out of credit card debt before its too late.

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