Before 2009, credit card issuers had a number of methods to obfuscate and exacerbate your credit card debt. These tools and tricks allowed creditors to play with your interest rates and bury their fine print in opaque terms.
Credit card debt can cripple your ambitions and financial mobility. While bankruptcy is a way to get a fresh start on your life, you do not want to accidentally find yourself in a place where you need it. As U.S. News points out, the CARD act provides key protections for consumers.
Protections that keep things clear
You are accountable for your own finances. The CARD act ensures that creditors must be as transparent with you as possible. This includes plenty of notice, as well as clear terminology and disclosures when you have a credit card with them. These protections include:
- No sudden interest changes. Prior to 2009, a creditor could raise your rates without notice and even retroactively apply new rates to old purchases.
- Longer grace periods. Since the act, creditors must mail or e-mail your statement 21 days in advance. Though one thing you should be aware of is that creditors do not have to provide a grace period.
- No unseen or unfair fees. Many cards for subprime consumers included hidden fees that would not show up before you got your statement.
Youth protection and stay-at-home spouses
One protection includes young consumers. Creditors cannot target anyone younger than 21 without proof of sufficient income and can no longer ply them with free gifts.
An unexpected caveat to this proof of income protection kept many stay-at-home spouses from signing up for a credit card without their working spouse’s approval. A 2013 amendment allows creditors to consider third-party income for applicants 21 or older now.