Cleveland Bankruptcy Lawyer Blog

In July of 2010, Ohio credit card holders will see some changes that may help them bring their credit card debt under control. On December 18, 2008, the Federal Reserve Board approved rules designed to help protect credit card holders from the unfair acts and practices employed by many credit card companies. The changes are also aimed at making credit card statements and billing practices more straight-forward and easier for customers to understand. The changes were adopted under the Federal Trade Commission Act. Along with other changes, the rules will:

• Forbid banks from imposing interest charges using the confusing “two-cycle” billing method (a method of calculating a customer’s average daily balance by using two billing cycles instead of one. This typically causes finance charges to be higher and eliminates grace periods for customers that carry a balance. In this method, if the bill is not paid in full at the time of the first billing, interest becomes retroactive all the way back to the first purchase date).

• To stop creditors from imposing unexpected interest charges or increasing the interest rate during the first year the account is open or increasing the interest rate charged on pre-existing credit card balances.

• To require creditors to provide customers with a “reasonable” amount of time to make their payments.

• To prevent creative payment allocation methods that maximize interest charges to the detriment of customers.

• To combat predatory subprime credit card practices by limiting the fees that can be charged to reduce the available credit.

The Federal Reserve Board has indicated that these reforms, the "most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts" according to Federal Reserve Chairman Ben Bernanke, are intended to increase transparency, fairness, competitiveness and to help consumers better manage their credit accounts and avoid unnecessary costs. These changes take effect July 1, 2010. For more information you can visit the Board of Governor's of the Federal Reserve System. If you are struggling with credit card debt, making only the minimum payments and carrying high balances you should contact a consumer bankruptcy attorney to learn your options and find out how you can eliminate credit card debt and get a fresh start.