With the three year anniversary of the 2009 CARD Act upon us, the research and advocacy group Demos has released a report suggesting the act has indeed helped low- and middle-income consumers pay down their card balances while avoiding fees. As many Colorado residents may know, credit card debt can put be a debilitating strain on family finances. The Act sought to protect consumers by limiting the exorbitant fees and sharp interest rate hikes, along with some of the other even more frustrating practices used by credit card companies.
The advocacy group conducted a survey that found nine in ten credit card holders that carry a balance have noticed some changes as a result of the law. One of the more obvious changes was the requirement that credit card companies provide a clear message about a consumer's debt on statements, and provide them with enough time between billing dates and charging late fees. Two-thirds of low- and middle-income consumers are reporting they are paying off their balances sooner than before as a direct result of information that now appears on their statements.
And, credit cardholders with debt ranging from $5,000 to $10,000 are even more likely to pay down their balances faster than before. Fewer households are also paying late fees or over-limit fees on their accounts, according to the survey. In 2009, 50 percent of respondents said they paid late fees with 28 percent reporting having paid late fees in the latest survey. The CARD Act, along with the state of the economy, appears to be changing some consumers' credit card habits.
The survey's news was not all good however. Although there has been an overall reduction in American consumers' credit card debt, 40 percent of low- to middle-income households report they are still relying on their credit cards to pay for every day expenses such as rent, mortgage, groceries and fuel. Periods of unemployment and high medical expenses were the main cause of debt with half of the households reporting they have debt as a direct result of medical expenses.
The sluggish economy has lead many Colorado residents to struggle with the increasing cost of living while wages remain stagnate. If you are struggling with mounting credit card debt and medical bills, consider consulting with a bankruptcy attorney to learn about various debt relief options that may be available to you, such as a Chapter 7. A Chapter 7 bankruptcy allow you to discharge your debt while all future income remains yours and out of the reach of creditors.
Source: U.S. News & World Report, "How the CARD Act Helps Consumers," May 31, 2012