The concept of a credit card can be sound. Some feel it is a good safety net. A recent report explores this a bit deeper. Read on to see another view of your credit card.
It was found that American families are losing the fight against lending practices as they are really working against them. It is time for Washington to address this crisis head-on and create policy that protects and promotes economic vitality for all American households.
The report entitled “The Plastic Safety Net: The Reality of Household Debt in America,” details current business practices in the credit card industry that make it difficult for lower-income families to manage their finances and stay out of debt. Also included in the report is data regarding the issuers’ ability to change the interest rate and other terms of credit any time and for any reason, and based on transactions unrelated to the account.
The report includes recommendations for reforms that would promote economic security for families and establish fair business practices that would result in more equitable and less capricious credit terms. Some key policy recommendations:
â€¢ Promote increased savings, not increased debt, to help families meet unexpected financial emergencies.
â€¢ Improve wages for working families.
â€¢ Improve access to affordable health insurance for all Americans.
â€¢ Strengthen unemployment insurance coverage and benefit levels.
â€¢ Reform “penalty pricing” that saddles financially-vulnerable consumers with thousands of dollars in extra fees and interest costs.
â€¢ Require changes in credit card rates and fees to be related to the original contract and limited to future activity on the consumerâ€™s account.
â€¢ Clearly disclose to consumers the long-term costs of making only minimum payments.
â€¢ Ban binding mandatory arbitration clauses that prevent consumers from pursuing complaints in a court of law.
â€¢ Require meaningful underwriting standards to ensure credit limits do not exceed a consumerâ€™s ability to repay their credit card debt.
With these recommendations, the average American would be better informed of what he/she is signing up for as well as some protection when acquiring a credit card.
Not everyone has money just sitting waiting to be claimed. Some of us are working hard for our dollars and do deserve to know fully that we can and will be protected once we sign an agreement.