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Credit card reform providing benefits

Wisconsin residents who have struggled with credit card debt may be interested to see what the government has done to help. In 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure Act to protect consumers from predatory lending practices. Recent research suggests that as a result of this law Americans may have saved as much as $209 billion in charges related to credit card debt.

The purpose of the legislation was to protect consumers from unfair credit card terms hidden in the fine print. For example, banks could set deadlines for payments in the middle of a day and charge late fees to consumers that paid in the afternoon. Many banks were found to advertise low interest rates or annual fees, while making huge amounts of money by charging variable interest rates, over-the-limit fees or late fees. Among other things, the CARD Act regulated fees and limited when banks could increase interest rates, both of which benefited the average consumer.

The Consumer Finance Protection Bureau released a report stating that, in the four years since the CARD Act became law, the total cost of having a credit card has decreased by two points. Much of this had to do with the regulation of over limit fees. Changing the way banks are allowed to process transactions saved customers approximately $2.5 billion on over the limit fees in 2012. Consumers also spent approximately $1.5 billion less in late fees than in 2008.

When credit card debts seem overwhelming, a bankruptcy attorney may be able to help consumers negotiate settlements with banks. An attorney may also be able to help review a person's financial situation to help determine whether bankruptcy would provide the necessary relief.

Source: The Week, "4 reasons the CARD Act was really, really good for Americans", Carmel Lobello, November 11, 2013

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