Report shows credit cardholders shunning their cards due to enactment of new law

Nancy Brown, 32 years old, has decided to reject the use of her credit cards with the new CARD Act in place. She says that she does not want to be indebted anymore the way she had been three years ago. She said that after years of using credit cards, it may be the best time to pay all of her remaining balance and have her account closed. This is where she says things can be better managed away from added fees and increased interest rates.

Brown recognizes that the price of getting a credit card is too high as opposed to the benefits we think even with the supposed protection of the new CARD Act.

Data from the credit research agency Credit Rise reveals that 45 percent of all credit cardholders surveyed are now considering closing their accounts. Credit Rise is quick to point out that this is a move consumers make to preclude any increases in debt.

The agency linked the consumer`s rejection of credit cards to the higher charges and lower initial credit limits. Credit Rise further adds by saying that among those who consider shunning their credit cards, an overwhelming majority has had an experience, in one way or another, of terrible debt consequences. These were due to the new fees introduced to the already existing account charges and the interest rate increases.

Credit Rise stressed that the decision of consumers to rid themselves of their cards was mostly dependent on how they have mismanaged their accounts in the past, with those in trouble more likely to cancel their accounts. The agency said that with the credit amount granted to consumers in the past slashed by half; those who plan to also open their credit card accounts are now being discouraged. The new applicants find the reduction significant enough to reject the idea of opening their credit card accounts.

Credit Rise also says that new applicants are fed up with the lending standards of most of US banks. After the recession, the banks are out to regain lost investments. With the new CARD Act possibly reducing profit for banks, they are out to regain the same in other credit aspects.

BestCards chief executive Louie Barren, on the other hand says, that those who consider closing their accounts may need to examine alternatives like balance transfer; opting for other types of cards should they still find possession of a credit card necessary.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.