If you are part of an “average household,” you owe around $5,000 - $10,000 in credit card debt. Statistics are hard to nail down, but let’s face it: Americans are addicted to spending. We use our little plastic friends to bail ourselves out when we’re in trouble.
I know that some people will say they’re not part of the problem because they “pay off their card every month.” Regardless, shortsighted credit card spending is an American epidemic. But the industry is changing: in 2010, new credit card rules will affect the way that credit card companies do business.
In May 2009, President Obama signed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, which was created to help protect consumers from unfair and deceptive credit card practices. Today, February 22, the CARD Act takes effect, and consumers may be able to breathe a sigh of relief.
So what do the new 2010 credit card laws mean for you and your family? The legislation is complex, but the CARD Act will:
- Strongly limit annual percentage rate increases.
- Require a co-signer for credit cards issued to people under 21 years old.
- Severely restrict interest rate increases due to late payments.
Laws are never perfect, but this legislation is a step in the right direction. One of the nicest things about the CARD Act is that it stops credit card companies from having payment due dates that change every month. If you're paying off multiple credit cards, like I am, then you know how moving due dates can mess up your budget.
Not everyone is pleased with the CARD Act, however. JPMorgan Chase stated that they could lose as much as $750 million this year in lost late fees and other charges. (Somehow, I don't feel bad for them. JPMorgan Chase netted roughly $11.7 billion in profit last year. Their CEO, Jamie Dimon, personally makes about $15-18 million annually.)
You can read all of the official details at
WhiteHouse.gov. USA Today also has a great
summary of the CARD Act and how it could affect your household’s debt.
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