Credit Card Bailout

The recent economic crisis highlighted many discrepancies in the way credit card companies conducted their business. Statistics have revealed that more than 60 percent of families in United States had credit card debt and a large number of them were struggling to make ends meet. Realizing this, the Administration decided to make some amends to the way credit card companies did business and they devised the credit card bailout program. There are some myths surrounding the Credit Card Accountability Responsibility and Disclosure Act of 2009, one of them is that the government will pay your credit card debt or your debt will be forgiven, so such thing will happen. The act has made reforms to the way credit card companies functioned, but it does not pay or forgive credit card debt.

Credit Card Bailout Act

The Credit Card Accountability Responsibility and Disclosure Act of 2009 also known as the credit card reforms act of 2009 has widely been misinterpreted as a bailout program which it is not. Following are some of the reforms made to the credit card industry which are aimed at curtailing spiraling debts.

• Credit Card Companies under the new act cannot arbitrarily change the rate of interest, now they have to give at least a 45 days notice to the customers. The customers also has 3 billing cycles to decline the new rates without incurring any penalties.
• Companies have to send the credit statements to the customers 21 days in advance so they have enough time to respond (earlier this time limit was just 14 days). The companies are also required to consider payments made before 1700 EST on the due date as on time payments as part of the credit card debt relief program.
• Under the bailout act, companies are required to have transparent deals. They will have to make their contact details like customer service phone numbers, email IDs readily available.
• The bailout reforms also restrict the companies from ambiguous terms like 'Prime Rate' and 'Fixed Rate'. Card companies cannot charge late payment charges if the customer has a proof of payment sent at least 7 days before the due date.
• The credit card debt bailout reforms also restricts companies from charging exorbitant 'Over the Limit' fees. The new act also intends to prevent the double cycle billing where in companies charged interest on debt paid on time.
• Reforms made in payment allocation bind the companies to adjust payments made by customers against transactions with high interest rates, for example cash advances. Under the new act, customers can set their own 'limit' and have a fixed credit limit. This will put curbs on charges levied on crossing the credit limit.
• To protect the vulnerable population the new reforms prohibit companies from selling cards to people under the age of 21. They can only do this if the said person has a co signer who is over 21. Companies are also prohibited from charging any fees from customers for not using the card.

All these provisions are collectively known as the bailout reforms. If you are having trouble with your credit card debts it is advisable to contact consumer credit counseling services. Try and contact one which is part of the National Foundation for Credit Counseling (NFCC) or Association of Independent Consumer Credit Counseling Agencies (AICCCA).