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How does the CARD Act help credit card holders?

One of the most common ways for Long Island, New York, residents to get into debt is by overusing or overextending themselves with credit cards. In an effort to help consumers avoid or ease these potential problems, as well as prevent card companies from abusing card holders, in 2009 Congress enacted the Credit Card Accountability Responsibility and Disclosure Act, also referred to as the CARD Act. Consumers unfamiliar with the law may wonder how it protects them and what rights they are granted under the CARD Act.

The intent of the law is to protect consumers by placing limits on interest rate increases, interest charges and fees. With regards to interest rate increases, the CARD Act prevents credit card companies from raising the rate on existing balances during the first year of an account's existence. This limit does provide the companies with a few exceptions, though. For instance, an exception is allowed if the card issuer notified the borrower of this possibility when they opened their account, if the increase is dictated by an index out of the issuer's control, if the borrower does not abide by the terms of an agreement worked out with the card issuer or if the borrower does not pay the minimum monthly balance due within 60 days.

The CARD Act also provides certain notice and disclosure requirements on the part of issuers. These include a 45-day notice to cardholders of increases to the interest rate or changes to the terms and conditions. The change notice must allow the holder to have 45 days to cancel the agreements. The issuer must provide a statement to the holder of the monthly payment required to pay off the debt plus interest in 36 months, as well as a warning concerning making minimum payments. Statements must also include due dates for payments, fees charged and principal and interest paid during the current year. Notice must also be provided to the holder regarding the penalty interest rate applied if a late payment occurs.

Additional provisions exist within the law to protect consumers. Those already facing overwhelming credit card debt may want to speak with an attorney about their situation, to learn whether the CARD Act can improve their situation.

Source: FindLaw, "Credit Card Rules and the CARD Act," accessed on Aug. 16, 2015

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