New Credit Card Laws & Debt Relief
In the fall of 2009, laws were passed that were aimed at stopping credit card companies from taking advantage of consumers. One of these protections included longer billing periods and earlier notification of when a credit card bill is due. It also prevented credit card companies from suddenly increasing their interest rates without advance notice to the consumer.
While these laws were favorable to consumers, they offer no help if you are trying to dig your way out of credit card debt. Fortunately, there are other resources you can turn to if you are looking for credit card debt consolidation.
Consumer Options for Credit Card Debt Consolidation:
There are several ways that you as a consumer can combine all of your bills together, and make the process of paying off credit card debt easier. The trick to taking advantage of these options is to research them thoroughly and make sure that the method of debt consolidation that you are choosing today makes sense for you in the long run.
Consolidating Debt with a New Loan:
If you own a home, car or another piece of valuable property that you can use as collateral, getting a debt consolidation loan is one option for reducing your debt faster than you are presently doing. This is a large loan that is provided in order for you to pay off all of your smaller debts. Although getting a debt consolidation loan through the equity in your home or using your vehicle as collateral may net you a lower interest rate and the ability to take a tax deduction, there are several things you need to be aware of, including:
You may lose your home if you fail to make timely payments on your new loan.
Having a new loan can tempt you into spending more, which will only add to your debt problem instead of resolving it.
You need to be very disciplined to use the loan only for its intended purpose and pay it on time each month.
Transferring Balances to a Low Rate Card
Since the credit industry is very competitive, card issuers often try to lure customers away from the competition by offering very low introductory interest rates. These low rates are usually offered for approximately six months. If you are disciplined and pay off your balance before the rate expires, this could be a good option. However, you need to make sure you understand whether there are balance transfer fees and if they would outweigh any benefit you would realize by transferring to a particular credit card.
Professional Credit Counseling
If your finances have truly gotten out of control, your best option for credit card debt consolidation may be a consumer credit counseling agency. When you enroll in one of their programs, a counselor contacts your creditors for the purpose of renegotiating minimum payments due and interest charges. You make one payment to the agency, and they are responsible for paying each of your creditors every month.