New credit card laws go into effect today, aimed at protecting consumers from drowning in debt, according to
The Detroit News. But does it really help?
While the new laws are a step towards reform, high fees and interest rates will still cause consumers to default on their loans.
Here are three resources for struggling borrowers: payday loans, prepaid cards and subprime credit cards.
- With payday loans, consumers give lenders a postdated check for the amount of the loan plus a fee. The lender in turn, holds the check for two weeks until the money is repaid or the check is cashed. The interest and high over-draft fees can build up.
- Prepaid cards are good for consumers who don't already have credit or debit cards and be purchased very cheaply at any Walmart. Money on the cards can be used to pay bills online, book airplane tickets etc. and generally work like gift cards, in that consumers can put cash onto the card when needed. Fees vary from card to card and sometimes there are no fees at all. Still, prepaid card issuers aren't required to provide legal protection for consumers.
- Subprime cards which are marketed to consumers with poor credit scores are often loaded with fees. Fees will be capped at 25 percent of a card's credit limit in the first year. But there's no cap on interest rates.
President Obama is pushing for the creation of a consumer protection agency but its fate in question, leaving consumers to fend for themselves.
Read the full article at
The Detroit News by clicking
here.
