Consumer Credit Protection Act of 1968
The year 1968 was a pretty tough one in the United States. You can use Google to answer the “why” on that one. Or you can stay here and learn about one of the few positive developments from 1968: a credit lending law.
Yes, 1968 was that bad (well, Super Bowl II was pretty good).
That year, Congress passed the Consumer Credit Protection Act of 1968, also known as the Truth in Lending Act.
This Congressional Act created a number of disclosure requirements for companies issuing loans to U.S. customers. That list of lenders includes mortgage firms, auto-financing firms, and credit card issuers. The requirements include the disclosure of loan terms, annual percentage rates (APR), and cost to the borrower.
This law is the reason why, when you apply for a credit card, they send you a PDF or envelope in the mail that is 77 pages long and is drenched in “legalese.”
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Finance: What is a Credit Limit?39 Views
Finance, a la shmoop. What is a credit limit? Alright people well simply put the
maximum amount you get to charge or use on a loan or credit account, that's a [Credit limit definition written on a 100 dollar bill]
credit limit. So yeah it's that thing that keeps toddler Joey from ordering
two hundred thousand dollars worth of Snickers bars. [Toddler looking at the snickers bar]
If you accidentally you know leave out your Amex. (Illustrative example time) If you have a ten thousand
dollar line of credit or credit card you can't spend $20,000 on a trip to Vegas,
sorry. You might be able to go on a smaller trip to Atlantic City but once [Picture of Atlantic City]
you hit that 10 grand well the party's over until you pay some of that money [$10,000 flashing in red]
back, and by the way taking that smaller trip and then putting everything on red [Chips landing on a roulette table]
22 in hopes of funding your next trip to Vegas? Probably not the soundest
financial planning... sorry, let's keep it real. [Guy putting on a serious face]
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