The newly formed government agency, U.S. Consumer Finance Protection Bureau, reports that the Credit Card Accountability, Responsibility, and Disclosure (CARD)Act has caused the U.S. credit card industry to revise policies while reducing and eliminating some penalty fees. Highlights of the report include:
- Over-limit fees have all but disappeared.
- Prior to the CARD Act, 15 percent of credit card issuers reset credit card interest rates annually, but now approximately 2 percent of issuers are resetting interest rates each year.
- Assessed late payment fees fell to $427 million in December 2010. This represents a decrease of more than half of the January 2010 amount of $901 million.
- Since the inception of the CARD Act, credit card late fees have fallen from an average of $35.00 to $23.00.
These developments are a step in the right direction toward helping consumers with debt management. Here are some tips for applying CARD Act principles to your own credit card debt.
CARD Act: Gaining personal control over credit card debt
Credit cards: Evaluate your credit card accounts and usage. Reduce the finance charges you’re paying by using a debt consolidation loan or transferring high cost balances to lower cost accounts.
Accountability: Understanding how and why you got into debt can help you find debt solutions appropriate to your situation. Taking responsibility for your debt doesn’t require being your own loudest critic, but it does require being honest with yourself and seeking debt help if needed.
Responsibility: Taking control of your finances by establishing a cash-based budget and an affordable debt management plan is essential to gaining freedom from debt. While acknowledging past mistakes, focus on your new budget and debt management plan for eliminating credit card debt.
Disclosure: No, you don’t have to tell your neighbors that you’re awash in a sea of debt, but “disclosing” to yourself how much you owe, what it costs and understanding how credit card debt compromises financial security is an important step in the process of managing, reducing, and eliminating debt.
High finance charges and penalty fees can rapidly cause credit card debt to expand out of control. If you need debt help, consider talking with a financial advisor or consumer credit counseling service. Debt consolidation and credit counseling services can help you develop a budget, and may negotiate affordable payment terms with credit card companies. Avoid scams by checking out debt help services with the Better Business Bureau or other consumer advocacy service. Reputable debt help organizations typically offer free consultations and do not expect any payment until they have implemented a debt management plan for you, and you have agreed to all the terms of the plan.