The Credit Card Act For Young Consumers

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In May 2009, President Obama stated, “The credit card act was intended to uphold basic standards of fairness, transparency, and accountability (Lindow).” Is this to say that credit card companies were deliberately deceiving consumers to capitalize on profits? Unfortunately, the answer is yes: profit was not the concern of this act, as the banks had abnormally high profit margins. What was in question, however, was the approach of generating these favorable profits for banks (Warren). The Credit Card act provides protection for young consumers with specific provisions such as: fix interest rates, 21 day grace period, the right to opt out of adverse changes in terms, a 21 year age requirement and clearer agreements for transparency. Each…show more content…
This was a gigantic issue, as creditors knew for certain; a majority of young applicants would max out their credit cards making redundant purchases. In addition, they were more than likely going to default on their debt, as they did not have jobs or enough disposable income to cover the debt they accumulated. This was a magnificent win for young consumers, as they would no longer have an option to give into their temptations and impulses to buy items they frankly didn’t need, let alone couldn’t afford. This still leaves room for debate, as those temptations still remain after the age of 18. Unfortunately, because of the change, creditors lost a huge chunk of young clients. Now let’s focus on three really important provisions that address: fixed rates, terms and credit card fees. Creditors use to be able to change the APR within a blink of an eye and consumers, were not informed or did not have the ability to opt out of the plan. Fortunately, consumers now have protection that allows them to have a fixed annual rate on their debt (Credit Card Act, Section Sec. 103). When a credit card agreement states that the APR is fixed, the rate must not vary or change over a specified period. There is only one exception, which is as follows: a rate can be subject to change if, a lender begins to make late payments or miss payments completely (Detweiler). Thanks to high interest rates that compounded rapidly, small addition charges turned into enormous debt that could not
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