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How the CARD act impacts consumer lending

The Credit CARD Act was passed in 2009 in response to allegations of consumer abuse within the credit card industry. It was designed to provide greater protections to those who used credit cards or are applying for one in Florida or anywhere else in America. Specifically, the legislation said that banks were not allowed to raise interest rates within one year of a new account being opened with a few exceptions.

If a credit card issuer does plan to raise a borrower’s interest rate after one year, the borrower must be notified at least 45 days in advance. Furthermore, the rate increase applies only to new purchases. Within that 45-day period, cardholders have the right to cancel their agreements without it counting as a default. Credit card issuers may not force a consumer to pay off his or her full balance upon cancellation.

Consumers must now be warned about the consequences of making minimum payments on their balances each month. They must also be shown how much it would cost to pay off their balances within 36 months. If a card issuer plans to charge a penalty rate in the event of a late payment, the issuer must tell the borrower about the penalty rate as well as what that rate will be.

Those who are struggling to keep up with credit card debt may want to consider filing for bankruptcy. Bankruptcy may allow an individual to either discharge credit card debt or reorganize it. This may make it easier to obtain a fresh financial start or otherwise reduce that person’s monthly debt payments. An lawyer may be able to help an individual learn more about the process of filing for bankruptcy as well as any other benefits of doing so.

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