Creditnet News Story
Reforms have made credit card debt worse for some
Monday, July 26, 2010
By William Davis
Many consumers believed that the passage of the Credit Card Accountability, Responsibility and Disclosure Act would help them reduce the amount of credit card debt they carried, especially if that total was particularly large. But that hasn't been the case.
According to a report in the Fort Collins newspaper the Coloradoan, many consumers with large amounts of credit card debt have been adversely affected by the new laws that govern the way issuers can change rates and fees. For example, many cardholders on fixed incomes that carried a large balance may have seen rates increase considerably, but have been unable to make larger payments, leading to a larger total balance despite the principal staying the same.
The paper said that credit card companies raised rates before the law took effect to maximize profits, even though a measure was introduced in the House of Representatives that would have prevented them from doing so. That measure died in the Senate, however.
According to a report from the New York Daily News, only consumers who make more than the minimum payments on their monthly bills will have that money go toward the part of the balance with the highest interest.
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