Dallas, TX (MMD Newswire) March 3, 2010 - The Credit Card Accountability, Responsibility and Disclosure (CARD) Act, designed to provide new credit card protections to consumers, went into effect on Monday, Feb. 23. Although the Credit CARD Act is a step toward consumer protection, consumers are still vulnerable to a few ambiguities.
Debt settlement market leader Credit Solutions continues its role as consumer financial advocate by advising clients and consumers to watch out for loopholes in the new credit card laws.
Consumers should be aware of the following:
• Creditors cannot raise the interest rate on a consumer's existing balance during the first year unless they are 60 days late on a payment, but if consumers are over 60 days late on a payment, there is no limit on the interest rate card companies are allowed to charge.
• Consumers with accounts older than a year must be given 45 days notice before a rate increase; however, many consumers will be unable to pay off their debt in 45 days. With no interest rate limit, this could be costly.
• Credit card companies may also switch a consumer's fixed interest rate to a variable interest rate. Variable rates go up and down with the prime rate, which is at a record low. This means, consumers' interest rates will eventually raise when the Federal Reserve adjusts the prime rate.
• The over-the-limit fee may have been eliminated, but creditors can create new penalties and fees on existing cards. For example, they may add charges to receive a paper statement, fees if a card is inactive even if there is no balance or a new annual fee.
• Credit card companies may also lower your credit limit or close your account with no warning.
The best way for consumers to protect themselves is to read and save all 'Change of Term Notices' that come in the mail, advises Credit Solutions.
For more information on the Credit CARD Act, visit www.federalreserve.gov/consumerinfo.
About Credit Solutions
Market leader Credit Solutions is recognized by the American Business Awards for the "Best Customer Services Department in Financial Services." A charter policy partner of the United States Organization for Bankruptcy Alternatives (USOBA), Credit Solutions is certified by BSI Management Systems for USOBA best-practice compliance. Since its 2003 inception, Credit Solutions has assisted more than 250,000 U.S. customers in becoming debt-free, settling more than $1.2 billion total of consumer debt.
For more information, visit www.creditsolutions.com. En español: http://espanol.creditsolutions.com. Follow us on Twitter at www.Twitter.com/smartsavingtips.
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