The Credit CARD (Card Accountability, Responsibility and Disclosure) Act may be introducing may solve many problems for credit card holders but is also introducing a few of its own as well. It isn't its fault, however and the new problems are primarily being driven by credit card companies trying to seek new avenues for profit as the Credit CARD Act closes many of their traditional ones.
One particularly problematic side effect of the Credit CARD Act is the introduction of higher monthly minimum payment requirements. Generally speaking, paying only the minimum amount due every month is not really an optimal way to handle credit card debt. Still, many credit card holders rely on the low minimum monthly payment to at least revolve their debts while they try to get a handle on their finances.
Now, as credit card companies prepare for the closing down of many of their profit sources such as interests, credit card holders are seeing an alarming increase in their monthly minimum payment rates. A number of major credit card companies have already issued notices to their clients informing them of re-calculations of their minimum monthly payments.
This increase in minimum monthly payments is proving to be disastrous to many credit card holders. Owing to the economic crisis and the high unemployment rate, many credit card holders have very limited maneuvering room in their finances. Some of these credit card holders are barely hanging on, revolving their debts, relying on a low monthly minimum payment requirement. With the increased monthly minimum payment rate, these credit card holders are finding out that they can no longer keep up with their credit card payments.
Fortunately, there are alternatives. One is to move their balance to another credit card line. However, given the current state of the credit card industry, that is probably easier said than done. Right now, finding a low interest rate balance transfer card is very difficult, which is not to say that there aren't any out there. There are but it will require quite a lot of looking.
Another solution is a home equity loan. If the card holder can get enough equity out of his or her home, then he or she might be able to pay off the credit card debt completely to negate the effect of the raised minimum monthly payment rate. The problem with this solution is that it puts the credit card holder's home at risk. Also, given the current status of the property markets, the card holder may not get a high valuation of his or her home.
The best solution will vary from card holder to card holder. However, for most card holders, one thing holds true: paying off their credit card debts as quickly as possible and minimizing on credit card usage is the best thing they can do at the moment.