Back in 2009, Congress passed a new law called the Credit Card Accountability Responsibility and Disclosure Act of 2009. This bill, otherwise known as the Card Act of 2009, was created to further regulate credit card companies and the interest rates they charge. The idea behind the law was to stop credit card companies from raising interest rates without notice and charging fees for inactivity. Analysts recently reported that this law will cost the credit companies $390 million in fees. Because of these new regulations credit card issuers have been scrambling to come up with replacement programs to regain their lost fees. Recently, a news agency reported that the Card Act of 2009 will eliminate some of the unfriendly tactics used by credit card companies, but it will cause an equal number of new unfriendly tactics that are unregulated.
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Credit debt is one of the number one reasons for individuals filing bankruptcy today. Most Americans are carrying an average of $16,000 in credit card debt. Prior to the Card Act of 2009, when a debtor would get behind on their credit card payment, the creditor would increase the rate of interest causing the debtor to default more quickly. It almost seems crazy that the worse your credit is, the more interest the consumer has to pay. The reason they don't have money to pay their bills is because interest is crippling their overall budget. You hear this over and over again with individuals that are filing bankruptcy.
Now that it's 2011, creditors have found ways to recoup the lost revenue that the Card Act of 2009 caused them. Many consumers don't even realize that this is going on. Many cards now charge for inactivity fees, debit card annual fees, elimination of rewards programs, limiting transactions for some debit card customers, they have reduced many credit limits and they have outright canceled credit card accounts for people that lack stellar credit. Even though the banks are sitting on piles of cash from the Federal Reserve and they are reporting it and not loaning it out because the risk is too high. Many people in America are carrying very high debt ratios that were acceptable back in 2006, but are no longer considered status quo.
With so many people relying on unsecured credit as a source of making ends meet it's easy to see why many are being forced into filing bankruptcy. Just ask any bankruptcy attorney and they will have hundreds of stories of how the interest from credit card debt pushed a debtor over the edge into bankruptcy. People need to understand that the banks are there to make money and not to help you like the ads say. Banks should take the blame for some of the irresponsible lending practices of the past that have forced Americans to file for bankruptcy just to save their hide. Getting away from paying high interest rates to credit card companies can be extremely freeing for consumers. If filing bankruptcy is the only way to break the cycle then it's well worth it and you should consult a bankruptcy attorney ASAP.
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