The Debt Diva Cautions New Credit Card Law Does Not Protect Against High Interest Rates

COLUMBIA, Md., Feb. 1 /PRNewswire/ -- Clarky Davis, The Debt Diva and credit advisor at CareOne Services, Inc. today counseled that the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD) has new regulations that will benefit consumers; however, the act should not be viewed as an automatic solution to financial problems. While the Credit Card Accountability, Responsibility and Disclosure Act, which takes effect on February 22, 2010, will have many consumers breathing easier, Davis warns CARD carries challenges, which could cost consumers large sums of money and prolong debt burdens.  

A driving factor in unmanageable credit card debt is a consumer's inability to pay off of a balance due to accumulating additional costs from fees and escalating interest rates during the term of the agreement. Davis supports the provisions of the new laws that will help prevent balances from spiraling upward, such as the new prohibition on banks from raising interest rates for one year. Davis is cautioning consumers to note that this provision is only a temporary fix and will not circumvent interest rates from increasing after the first year. The Debt Diva alarmingly points out that there is no ceiling on how high interest rates can rise.

"While the law does provide many important consumer protections, there is one glaring omission in its provisions – caps on interest fees," said Clarky Davis, The Debt Diva and credit counselor at CareOne Services, Inc. the leading debt service provider. "If you borrow money, you should expect to pay for that privilege, but companies can continue to punish a struggling consumer by raising interest fees to excessive rates of 18% and beyond."

Another tactic that banks are employing is to fight back with new fees that do not fall under the protection of CARD. Many credit card issuers are adding annual fees, implementing higher balance transfer fees or even including an inactivity fee for consumers not making purchases in a 12-month period. The Debt Diva is advising consumers to review their current credit card statements now for changes. CARD was signed into law on May 22, 2009, and although three provisions did go into effect in August 2009, others won't be implemented until February 22, 2010 and has given creditors ample time to prepare for revenue loss and change agreement terms.

Clarky Davis urges those who fall victim to the banks' increase in interest rates, changes in payment terms, or reductions in credit limit prior to the implementation of the new law, to only seek help from a licensed and accredited debt management service provider like CareOne Services, Inc.

Although the Credit Card Accountability, Responsibility and Disclosure Act, is not the financial magical pill many had hoped, Davis is endorsing many of the new provisions that will protect consumers and their money, with the warning that consumers suffering from debt burden may still need additional assistance in overcoming financial hardships.    

"Consumers should not look to the Credit Card Accountability, Responsibility and Disclosure Act as a 'cure' to their debt woes. This law does not fix the fundamental money management issue consumers are experiencing," said Davis. "Consumers must be better educated and more disciplined in how they handle credit and ONLY seek help from an accredited debt service, such as CareOne Services, Inc."

About Clarky Davis, The Debt Diva

Clarky Davis, The Debt Diva is a leading credit and debt management expert at CareOne Services, with more than 10 years of personal and professional experience in debt management. Based on her own journey overcoming debt and learning to live within her means, The Debt Diva's savvy spending strategies teach consumers how to be frugal and fabulous.  She approaches this topic in an engaging and entertaining way that is accessible to all consumers in her downloadable guides.  The Debt Diva's Frugal and Fabulous Lifestyle Guides cover topics from basic money management and budgeting to frugal fitness options and caring for your pet on a budget. Clarky Davis, The Debt Diva, has appeared on ABC News Now, Fox Business, Fox and Friends, and Nightline as well as contributed to Oprah.com. Davis blogs regularly about consumer debt statistics and trends, financial solutions and savings tips. Davis is a certified credit counselor and holds two bachelors degrees.

SOURCE Clarky Davis, The Debt Diva