Credit card ACT, is it really helpful

The Credit CARD Accountability Responsibility and Disclosure Act was formed by the USA government to uphold the rights of credit card users and offer fair practice from credit card issuers.

The act was passed keeping in mind the consumer but also had provisions for banks to recover lost revenues. One of the biggest strong points of the Card act was the drop in over the limit and penalty fees. There was a considerable drop in percentage of the over the limit and penalty fees charged to the consumer after the Credit Card Act became effective. Post the Credit Card Act the average late payment fees dropped to $25 from $39. Even better was the drop in over the limit fees charges to card holders. After the Credit Card Act only 11% of consumers were charged with over the limit fees as opposed to 80% before the Credit Card Act. The Credit Card Act also meant a better available credit limit. With a healthy credit limit, consumers are greatly benefitted when their credit score is calculated.

The entire scope of the Credit Card Act revolves around protecting the interest of consumers. The Credit Card Act ensures that the card holder who pays on time should not be penalized and even covered due dates for finalizing payments. The minimum payment clause is also well defined in the Credit Card Act and unprecedented hikes in interest rate are not entertained.

The Credit Card Act had a mixed response and has some loopholes. The credit card companies have found new ways to balance the lost revenue by charging the consumer. There are also many instances where the Credit Card Act had a negative impact on consumers. Since the credit card issuing companies wanted to recover their lost revenue due to the introduction of this act, it has become increasingly difficult to find a credit card with zero annual fees. The credit card companies have compensated by adding more credit cards with annual fees and the people who have multiple credit cards have to shell out more than what they used to. As the statistics suggest that the over the limit fees have dropped, there has been a counter measure by the credit card companies and the penalty rate has increased significantly from 21.9% to 29.9% post the Credit Card Act.

If a consumer wisely plans his spending and also considers all fees before a credit card is issued, then this Act will actually prove to be a boon for you and not for the credit card companies.