Staying out of debt may not be so easy even for those who pay off their credit card charges in full or who do not use their credit cards often. On September 29, 2009, the Federal Reserve Board proposed rules amending Regulation Z (part of the Truth in Lending Act) to protect consumers who use credit cards from a number of costly practices. The proposed rule seeks to generally: (1) stop increases in a credit card interest rate during the first year after an account is opened; (2) stop creditors from issuing a credit card to a consumer who is under the age of 21; (3) require creditors to obtain a consumer's consent before charging fees for transactions that exceed the credit limit; (4) limit high fees associated with subprime credit cards; (5) ban creditors from using the "two-cycle" billing method to impose interest charges; and (6) stop creditors from allocating payments in ways that maximize interest charges.
In response to the proposed rules, USA Today reports that credit card issuers plan to raise annual fees, and hit card holders with finance charges if they do not charge a certain amount each year. For instance, Bank of America will start charging an annual fee in 2010 card holders who have never carried a balance or paid late fees.
Not understanding credit card terms is how most consumers have gotten into bankruptcy. No annual fee credit cards became popular, but cardholders should read terms to understand if there is any expiration to any no annual fee offers, and whether a card without annual fees charges a higher percentage on interest rates. For example, some cards require people to pay service charges on unpaid balances when they are not able to pay the full monthly balance, still, you are required to pay the service charge for any unpaid balances.
Contact an experienced bankruptcy attorney for advice on the implications of credit card debt.
