Credit card debt is a problem in the USA, but since the recession started more and more consumers have started to move away from credit cards to other payment methods in an attempt to limit this debt. Consumers grew tired of excessive fees and skyrocketing interest rates, and money became tight for many families because of unemployment and other economic factors.
In 2009 the federal government passed the Credit Card Accountability Responsibility and Disclosure Act of 2009, or Credit CARD Act. This act had the intended purpose of protecting consumers from any undisclosed and unexpected term changes on the credit cards used. This was done in part because of the financial hardships that excessive credit card debt can cause and because of the way that credit card companies were operating.
New legislation discussed in 2011 will actually roll back some of the protections put in place by the Credit Card Accountability Responsibility and Disclosure Act of 2009. The federal rules and regulations on the use of debit cards has been tightened and this has caused many financial institutions to lose income from debit card use because excessive fees are no longer allowed and consumers must agree to an overdraft before they can be charged an overdraft fee. Banks are aggressively pushing the credit card products again in an effort to make up for the income lost on the usage of debt cards.
The Huffington Post reports that “Banks have spent the past year pushing credit on shoppers through aggressive advertising, low-promotional rates, and 0 percent offers, leaving no website, mailbox, or television commercial slot untouched with promotions to get shoppers charging. The new efforts come as a reaction to the Durbin amendment, part of the larger Dodd-Frank financial reform legislation, which was enacted on October 1. The regulation limits the amount a bank can extract each time a customer swipes a debit card to around 21 cents. Credit card swipe fees, meanwhile, are essentially a Wild West for bank revenue: Companies and issuers can charge between 2 and 4 percent per credit transaction, with rewards cards typically getting an even higher rate. Where a $100 debit card purchase adds up to pennies on the dollar in swipe fees for a financial institution, a credit card swipe might send a $2.50 chunk of change to issuers.”
What this means is more profits for the banks if a credit card is used and less if a debit card is used. The goal by the banks and financial industry is to get the shoppers hooked onto credit cards again instead of using debit cards. This will allow the banks to replace the debit card usage fees and overdraft charges that are no longer allowed under the new laws.
Credit card debt is one of the most common causes of financial difficulties and mounting debt. Even if you live within your means aggressive marketing of credit cards can tempt you, and this can start a cycle of debt that may be devastating. Many individuals who file for bankruptcy protection find that the credit card debt is the final topping that causes the cake to crumble.
Bankruptcy can help you reorganize your consumer debt or even eliminate this debt completely. In addition you will not have to deal with being harassed by debt collectors or be fearful of answering your phone and checking your mail. As soon as your bankruptcy petition is filed an automatic stay goes into effect, and this court order protects you from any collection activities and even pending lawsuits in most cases. This means that until your bankruptcy case is finished your creditors can not garnish, harass, threaten, or take any other steps to collect on a debt you owe. If a creditor does not receive bankruptcy court permission once your case is filed then the creditor can not try any methods available to collect the debt owed. If a creditor does not cease collection efforts immediately once the automatic stay is in effect then they can be found in contempt of court and face penalties.
If you are facing financial difficulties, because of credit cards, unemployment, or any other reason we can help. The bankruptcy attorneys at Richard West Law can provide a free debt consolidation consultation to help you find the right answer for your unique debt problems and circumstances. Visit https://www.debtfreeohio.com or call (513)771-8700 or (937)748-1749 to get the answers you want, and the financial relief you are looking for.