Credit Card Debt Problems & the Laws that Protect You
Congress has received several complaints from people about their credit card companies. They have accused the people at these companies of engaging in unscrupulous practices that have helped them to become mired in credit card debt. Because of all of these complaints, Congress decided to act and passed legislation to protect consumers from being taken advantage of by these companies.
Rising Interest Rates
One reason people fall into debt is because they purchase too many things with their credit cards and they leave a significant amount of money as a balance at the end of each month. This balance is subject to the interest charge that can be as high as 24.99 percent. But, a company can decide to raise people?s rates if they miss a payment.
Late Payments
The new debt laws now state that these companies must wait until at least two months of non-payment have passed before they can raise the interest rates. After these formerly delinquent customers have made their payments on time for a period of six months, these companies are obligated by law to lower the interest rate to what it had been before the late payment.
Future Interest Rates
Companies, sometimes, raise their clients? interest rates after a period of time without having informed their clients that this would be possible in their contracts. Under the new debt laws, banks will only be able to do this after they have let their clients know at least 45 days before they raise the interest rates.
College Students and Debt
College students are a very good risk for lenders; among people in this age group, college students have less debt and they pay their balances in full more often, according to a study by Georgetown University. A problem presents itself because college students are also the most likely people to pay their bills late and they, therefore, receive more late fees than anyone else because of it.
College students also caught the attention of Congress when they were writing their new debt laws. Written into the legislation is the requirement that people under age 21 have the means to pay their bills when they are obtaining credit cards. If not, they will need to have their parents co-sign for them.
Decreasing Credit Card Debt
One way that people can decrease their credit card debt is to obtain a credit card debt consolidation loan. A credit card debt consolidation loan is a loan that people who have more than one credit card can use to pay their balances in full. After these balances have been paid, several great things can happen:
1. Their credit card companies stop reporting late payments to the credit bureaus,
2. They have lower interest rates to pay on their new loans,
3. They have lower monthly payments to make and
4. Their credit scores begin to rise.
Those who have obtained significant debt before the new debt laws went into effect have recourse to get out of debt with a credit card debt consolidation loan. After they have obtained this loan, their financial futures can begin to look much better for them.