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How the CARD Act Could Change Personal Loan Marketplace

[Apr 6, 2010.]


Need a personal loan of between $500 and $2,000? Credit card or personal loan, what'll it be?

Traditionally, a credit cards has been the option for individuals who want to buy something, whereas personal loans have been the option for people who need cash in their bank accounts to pay rent, a car repair, a tax bill, or that sort of cash only expense.

But now, thanks to Congress passing the CARD Act, which aims to reform all Americans' relationships to those magic plastic cards, the landscape for individuals who need that $500 to $2,000 is changing.

A Lot of People Really, Really Hate Credit Card Companies

The main reason the CARD Act even came into being is because the vast majority of people who have used credit cards felt that credit card companies were, at least, attempting to confuse consumers into paying more fees and interest than necessary and, at most, directly ripping off consumers in a "blood sucker of the poor" manner.

Investigative specials like "Secret History of Credit Cards" from PBS tipped credit card users to the "tricks of the trade" in the credit card business, such as raising interest rates on cards with impunity and very little warning to the consumer.

People got fed up. Congress eventually responded with this new set of laws that, among other things, requires increased disclosure of terms, decreased exposure to fees, and demands a revamp of the credit card companies' tried and true business models.

Bad Personal Loan Companies Also Under Fire

Personal lenders, especially bad credit personal lenders, while perhaps not as reviled as the credit card companies, have not exactly been known for their lack of fees or low interest rates.

In an environment where so many people are drowning in debt, though, it's going to be more important than ever for personal loan companies to adequately disclose the cost of their loans, as well as seeing if they can get those costs down for people who really need personal loans.

This movement toward more transparency and more fairness in the personal loan marketplace can be seen by visiting a website like ThinkCash.com. With its emphasis on telling customers exactly what a loan costs and encouraging customers to pay back loans quickly to avoid interest and penalties, ThinkCash.com and other online personal lenders may be leading a revolution of sorts in the personal lending industry.

The CARD Act is just another reminder that borrowers are sick and tired of being gouged. Personal lenders of all kinds should pay attention to that clarion call.


About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.

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