Living in the United States, or even virtually any other developed nation, usually requires the ability to obtain some form of credit. In the past, financial companies had free reign on many aspects of credit, allowing them to charge and set terms as they saw fit. The Credit CARD Act of 2009, however, changed all of that. Several important terms and guidelines were laid out in the The Credit CARD Act, all of which were designed to make the credit industry more fair, and curb the practice of predatory lending as much as possible.
A wide assortment of guidelines dealing with the interest charged on credit cards were laid down in the aforementioned Act. For example, rate increases now require a 45-day notice, as opposed to the 15 days it was previously. Rates on existing balances are also now fixed, avoiding the possibility of an increase in interest on charges already made. Finally, the past tendency of companies to apply payments to lower-interest charges, thus allowing those with higher to accrue interest at an advanced rate, was also abolished.
Nothing can be more annoying than the random fees associated with virtually every credit card. While in the past these fees could be pretty much whatever the card company wanted, the Act has capped this fee at $25 for virtually situation. Another welcome improvement is that charges made that would put you over your credit limit can no longer be automatically accepted by your credit institution. This practice must now be “opted in,” allowing you to bypass over-the-limit fees whenever possible.
Before the Act was passed, payment terms were much more liquid than they are now. Companies must now provide a full 21 days to make a payment, before it is considered late. The Act also made it mandatory for companies to disclose the length of time it would take for a consumer to repay their balance making only the minimum payment. As this practice can take years, alerting members to this fact can provide incentive to make higher payments than just the minimum.
While we may have been completely at the mercy of credit card companies in the past, this legislation provides real support for the average use. Never pay more than you absolutely have to by keeping yourself informed on the latest rules companies have to follow.
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