As the number of credit card holders increases, so do the number of complaints against credit card companies. Consumers have been experiencing a high number of scrupulous business practices by credit companies, leaving many in debt beyond their means of resolution. Forced to seek debt settlement options or bankruptcy, many consumers have fought for years to get more regulations of the credit lending industry.
It seemed as though their requests had been answered in 2009, when The Credit Card (CARD) Act was created to prevent abusive practices by credit card companies. The CARD Act was also supposed to protect consumers from outlandish fees and interest rates; however, there is question as to whether the program is advocating for consumers the way it was intended.
What You Haven’t Heard
Now that awareness has been raised, more people are clueing into the fact that The Credit Card Act possesses several loopholes that are leaving many consumers in worse position than before.
Under the 2009 program, consumers were under the impression that their credit lender could not increase their increase rate. What the fine print reveals is that the credit lender is allowed to increase the rate under many circumstances.
A variable rate credit card is typically based on the Prime Rate, which is set by the Federal Reserve. Any increases in the prime Rate will cause an increase in the card’s interest rate. The interest rate on a fixed rate card may increase if the consumer is 60 or more days delinquent.
The fact is that many consumers simply did not know that the only requirement of the CARD Act, was that the card had to be greater than 12 months old and give a 45 notice of the increase in rate.
The CARD Act does not protect consumers against increases in interest rates charged for cash advances or future purchases. Many consumers assumed that cash advance interest rates would remain the same as when they initially applied for the card, when the rates are free to increase with future cash advances. Although the CARD Act does protect against retroactive interest rate hikes on old purchases or balances, it does not protect against increases for future purchases on a line of credit.