economic crisis « Credit Card News

Credit Cards » Credit Card News » Credit Card Issuers Backing Away From College Credit Cards

August 13, 2009

Credit Card Issuers Backing Away From College Credit Cards

It seems that the financial crisis, as bad as it has been for the country, is having some positive, albeit very minor, effects. Credit card companies have become much more conservative in offering their credit cards to those with limited means for repaying their debt, such as college students.

Credit Card Issuers Backing Away From College Credit Cards Only a few months ago, credit card companies would rush to market their credit cards to incoming college freshmen. In the heyday of “easy credit”, college students who had very limited income could easily get credit cards. There were even some cases where the credit card application was approved even though the student had no income therefore no means of paying off their debts. Such a practice would make no sense to a credit card company that wanted to have its debts payed off every month. It made perfect sense, however for credit card companies who were betting that the card holders would pay off only the fees or the minimum amount due, thus revolving their debt and increasing the credit card companies’ profits on their debt.

The situation was always precarious and, even before the economic crisis, many college students were already in over their heads in debt. Some graduated with large debts in their name even before they had secured employment. When the economic crisis began, borrowers with limited means of payment, including college students, began defaulting in their debt which ushered in the credit crisis. Credit card companies quickly found themselves in financial trouble.

Because of their near miss with bankruptcy and the upcoming credit card bill activation, credit card companies have become quite conservative with whom they are going to accept as clients. As a result, they are backing away from the college student segment of their market. To be sure, there are still going to be credit cards available for college students. The difference will be that it will be harder to get and credit card companies won’t basically be giving them away for whoever fills up the application form.

What this means for college students is difficult to say. Credit cards are certainly very helpful for college students who are often in need for readily available credit for purchases like book purchases and other class requirements. On the other hand, not having a credit card will also mean that the student will be able to avoid such purchases as buying unnecessary electronic equipment or making costly and unneeded trips and vacations. Whichever way the arguments goes, one thing is clear. College students who have the financial means to get a credit card will have a higher chance of getting them which is what is ideal in any case.

July 1, 2009

Getting Rid Of Multiple Credit Cards

The economic crisis has had an enormous effect on the average American consumer. Traditionally very free with their credit card use, the average consumer now considers carefully every purchase made on their plastic. While credit cards had become the preferred method of transaction in the past few years, nowadays cash is again becoming fashionable and with good reason.

Burdened with the economic and employment crisis, a majority of credit card carrying American consumers have been unable to keep up with their credit card debt payments. The resulting financial collapse that affected the credit card companies almost brought even the biggest and best of them to bankruptcy. It also brought forth the passage of the controversial credit card bill. The credit card bill is set to heavily regulate the way credit card companies are making profits. The result will be hat credit card companies are going to lose many of their most profitable income lines.

The upshot of all this is that, now, credit has become very expensive. Credit card companies are raising interest rates and fees like there’s no tomorrow, which is literally the truth. Consumers are, understandably wising up and being uncharacteristically careful of their credit card spending. Whereas, in the past, owning several credit cards was the norm, many credit card owners are now thinking of ditching their extra credit lines and maintaining only one or two.

One of the biggest problems with getting rid of a credit card line is that it will have a big effect on the consumer’s credit score. The credit score is what dictates the ability of a consumer to take out a loan. The lower the score, the more difficult to get a loan. One of the actors that affect a consumer’s credit score is the ratio between his available credit and the balance that he carries. Logically, by terminating a credit line, he will lose some of his available credit which will lower that ratio. However, keeping a credit card active is fast becoming very expensive. Many companies are bringing back annual fees and, for a card to remain active, the owner has to make regular purchases on it.

Financial experts agree that, nowadays, it is unwise to keep multiple credit lines. They suggest that, for those who want to get rid of unused credit lines, timing is key. Card holders who expect to take a loan should try to keep their credit score as healthy as possible. Therefore, terminating a credit line may not be advisable. When terminating a credit line, it is also important to remember that, usually, the older the credit card, the bigger its effect on the score, so card holders are advised to keep their older credit cards and terminate newer ones instead.

June 28, 2009

Chase Credit Cards Minimum Payments On The Rise

As the economic crisis continues, credit card holders carrying Chase credit cards are going to be in even worse condition. This month, Chase has just announced that they will be raising their minimum amount per month to 5%, up three points from the former 2%. Thousands of Chase credit cards are being affected by this worrying increase.

Chase Credit Cards Minimum Payments On The Rise The increase seems minor to many observers and, in fact many Chase credit card holders will probably consider it as a mere annoyance instead of something serious like an interest rate or fee increase. However, for a select segment of Chase credit card holders, the effects of the increase are very disturbing.

The particular segment most troubled by the increase in minimum payment rates are those Chase credit card holders who are carrying large credit card balances and who are maintaining a very tight budget.

Chase customers who call up the company are usually told that the policy change is due to the economic slow down. Customers who tried to get Chase to lower their monthly payments were told that, while it is possible to negotiate a lower amount, Chase would increase their interest rate by several percentage points. Some customers report a rise to 21.99% from an original interest rate of 3.9%.

While Chase claims that the increase in minimum payments is due to the economic difficulties, an analysis from Consumeraffairs.com based on customer complaints show that the change has little to do with the credit ratings of Chase credit cardholders or how long their customers have been with them. Instead, the most common denominator among Chase credit cardholders complaining about their recently increased minimum payments is that they all mentioned that they took advantage of a promotion from Chase which offered a fixed rate at a very low amount. The offer was also given an extended time period.

There is a possibility that Chase is increasing the minimum monthly payment of their customers who have interest rates that are fixed and relatively low in order to increase collection of their low-interest profits. This will presumably be then rolled into loans with larger interest rates. Like most credit card companies nowadays, Chase probably wants to increase their profits now before the rulings of the credit card bill come into play.

Unfortunately, many Chase credit card holders are getting caught in a pinch. They have to contend with higher monthly minimum payments. If they want to keep their current monthly payments, they will have to deal with a much higher interest rate.

June 26, 2009

Debt Settlement, A Two Edged Blade

Understandably, American consumers are now scrambling for every available means of maintaining their finances. A large debt is a huge drain on the monthly income and is therefore something which should be settled as quickly as possible. Skipping on debt payment is an option and, indeed many consumers carrying debts too big to handle are opting for it. However, in the long run, it is a disastrous solution. The best way to get rid of debt is to pay it off. The problem is that, in the current economy, paying off debts can drain away all of a month’s pay.

Debt Settlement, A Two Edged Blade This is why debt settlement is a fast becoming popular way of getting out of debt. The popularity of debt settlement is caused in a big way by the high growth of debt settlement companies. Debt settlement companies are financial entities which try to entice debt laden credit card holders by promising to settle their debts for a fraction of the original amount. These companies often make it sound as if debt settlement is an easy and safe way to settle your debts. Unfortunately, nothing could be further from the truth.

Debt settlement is a risky affair. If you use a debt settlement company, there is a large probability that you will get worse off than you were originally. Debt settlement companies also offer a service which you can very well do on your own without having to pay large fees.

While debt settlement companies are risky, debt settlement itself is also something that no one should take lightly. True, because of the economic crisis, credit card companies are more than willing to settle for a lower amount in order to forgive a debt. However, when a credit card company does this, they are likely to stop trusting you as a borrower.

The biggest blow that you’ll get when you go for a debt settlement is in your credit score. Your credit score shows how good of a borrower you are. When you get loans, your credit score is usually the first thing that a creditor will check. A low credit score will lower your chances of getting the loan approved. This is why the effect of a debt settlement agreement can be very dangerous for you. Debt settlement will put a black mark on your credit score which will stay there for seven years. It will have a huge negative effect on your score so that you will find it difficult to secure a loan in the future.

To avoid ruining your credit score, review every available solution first before you settle on debt settlement. There are many credit counseling groups which can help you do this. It is important to inform yourself first before you make a decision.

June 15, 2009

Survive The Economic Crisis, Keep Your Credit Score Healthy

Survive The Economic Crisis, Keep Your Credit Score HealthyYour credit score is one of the most important financial records that you have.

Survive The Economic Crisis, Keep Your Credit Score Healthy Your credit score serves as a check on how good of a credit owner you are. This is very important for loan and credit companies. By getting your credit score, they can determine if you are fit for getting a loan or credit or not. The better your credit score is, the better your chances are of getting a loan. Therefore, you should keep your credit score as healthy as possible.

To keep your credit score healthy, you first have to understand how your score is calculated. To put it simply, your credit score is the ration between your available credit and the balance you have. The larger your balance, the lower your score is. The lower your available credit, the lower your score is as well. Thus, if you have a large balance to your name, your credit score will be low. If you have little or no credit available your score will be low as well. Thus, to keep your credit score high, you must have as low a balance and as much credit as possible. It’s much easier said than done, though.

You need to be able to keep track of your credit score if you want to keep it healthy. You can get a free credit report easily from one of the three credit which are Experian, Equifax and Trans Union. These three credit bureaus can give you an annual credit report which you can use to trace your credit history. Through this, you can check out which credit lines are having a negative effect on your credit score and which are benefiting it. Your credit report will also have information on how you can contact your creditors which is very important because you can use it to have any problems that you find fixed.

Obviously, your credit score will be good if you keep your balances low. Therefore, try to pay off all your balances every month or, at least keep it as low as possible. However, you must also keep your credit lines open. This will keep your available credit high. So don’t close your credit card because you don’t use it that much. Instead, keep it active by charging minimal purchases on it and paying it off every month. A new problem cropping up for credit cardholders is the fact that credit card companies are cutting off available credit. With less credit available, even a little balance will already have a big impact on your credit score. It is therefore more important than ever to pay off your balances.

June 10, 2009

Professional Debt Management Options For Debt Laden Consumers

In these days of financial insecurity, American consumers are doing their best to balance out their finances. They are trying to make sure that they have enough savings or credit to their name in case a serious emergency should come up. Unfortunately, with the economic crisis hardly slowing pace, massive layoffs, rising unemployment and debt interest rates soaring to record levels, that is proving to be very difficult. What makes it even more difficult is that many of these American consumers are also carrying heavy debts.

Professional Debt Management Options For Debt Laden Consumers Getting rid of debt is, without a doubt the first step for anyone who wants to balance out their finances. The monthly interest and penalty fees by themselves can already ruin a budget. There are many ways to get out of debt. Consumers usually go with the “do-it-yourself” or DIY approach. However, there are many things to be said about seeking the help of professionals. While a DIY approach can work, a professional often has more experience and access to information and resources that a normal consumer does not have.

Here are three professional options that debt laden consumers can access to get a handle on their debts.

Credit Counseling

Credit counseling is where consumers should first seek out help for debt problems. When consumers go for credit counseling, the counselor takes a look not only at their debts but on their whole financial picture. Spending habits, payment habits, monthly expenses, monthly income and many other details are taken into consideration when a credit counselor creates a financial picture of a consumer. By doing this, the counselor can then help the consumer formulate a workable setup for debt payments. Counselors can also negotiate with lenders for consumers to give them better debt payment arrangements.

Debt Consolidation

For consumers who have multiple debts, debt consolidation may be the best solution for them. In debt consolidation, consumers take out a large loan which can cover all their other debts. The end result is that the consumers reduce their multiple debts into one debt. Debt consolidation can also mean better interest rates and lower monthly payments for consumers, provided they shop around for options and choose wisely.

Debt Settlement

Debt settlement is a type of debt management service wherein the debt settlement negotiates for a better monthly payment setup for their consumers. According to debt settlement advocates, the service can settle debts much faster than other debt management services. They even claim that debt settlement companies can arrange for the consumer’s debt to be lowered by an appreciable percentage.

Debt settlement is a hot topic in the financial world nowadays. There has been some controversy over shady debt settlement offers that ended up costing the consumer more. However, this does not mean that all debt settlement companies are questionable. Consumers looking for reliable debt settlement companies are advised to make sure that the debt settlement company that they choose is affiliated with the proper authorities.

June 8, 2009

What Good Credit Actually Means When The Credit Card Bill Goes Live

Consumers heaved a sigh of relief when, last May, President Barack Obama signed into law the credit card bill which was fast tracked through Congress and released also this May. Consumers are seeing the credit card bill as a great equalizer which will give them better control over their credit and curtail the unfair and abusive practices of credit card companies.

What Good Credit Actually Means When The Credit Card Bill Goes Live However, credit industry insiders are warning that the credit card bill may not be as consumer friendly as it sounds.

For the past years, credit companies had been profiting greatly, expanding available credit without taking into account the rising debt of cardholders and profiting mainly from high interest rates and large fees instead of debt payments. When the economic crisis hit, the credit industry found itself in a financial dilemma, burdened with toxic assets and increasing defaults. As a way to salvage what they could, they raised interest rates to astronomical levels and increased fees.

With the credit card bill in place, cardholders are hoping that things are going to change for the better for them, credit wise. However, if credit industry experts are to be believed, their sense of relief may be misplaced.

While the credit card bill does provide legislation which will make credit card practices less predatory and more consumer friendly, these same legislation will also mean that credit cardholders are going to have to deal with credit that is harder to get. For instance, the legislation limiting the capabilities of credit card companies to adjust interest rates of an existing debt means that credit card companies are going to be offering higher interest rates at the very start. It won’t matter either how good of a borrower the credit cardholder is.

Credit card companies see adjusting interest rates on an existing debt as a way to adapt the specific credit line according to the risk exposure of the cardholder. Without this capability, they say that they have no other choice but to spread their risks across their customers, regardless of risk. What this means is that, if a one cardholder is not able to pay the interest rate commensurate to the risk that he or she poses for the credit company, then all the other customers of that company have to pay a higher interest rate as a result.

Whether this scenario will actually happen or not still remains to be seen, cardholder advocates counter. Credit cardholders are getting smarter about managing their credit and, with the disclosure amendments in place, they can make much more intelligent decisions. Competition among credit card companies is another factor in their favor as well.

June 5, 2009

Credit Card Bill Means Industry Restructuring, Says Visa

The largest payment network of the world, Visa Inc., recently released a statement saying that the new U.S. legislations are going to force the credit industry to rethink itself and restructure to adapt to the expected loss in revenue.

Credit Card Bill Means Industry Restructuring, Says Visa The legislations that Visa is referring to is the much heralded and highly controversial credit card bill which President Barack Obama recently signed into law. Among other things, the bill will take away the capabilities of credit companies to make arbitrary interest rate increases, it will block them from charging certain types of fees and it will put a limit on the penalties that credit companies give out which the government considers to be unfair.

According to Joseph Saunders, Chief Executive of Visa Inc, the credit card bill will have a major impact on the way the credit industry operates. “It’s going to cause the whole industry to rethink itself.”, he said during an interview. He further elaborated that the legislation will result in a shortage of credit, making it available only to a limited number of people.

Major credit card companies including Citigroup, JPMorgan, Capital One, Bank of America, Discover and American Express will be the ones who will feel the effects the most. Collectively, these companies hold 80% of the credit card industry in the U.S.

In the past few years, these credit card companies saw their profits rise to astronomical levels as the credit boom happened. When the economic crisis hit, they soon saw losses by the billions. Credit cardholders, burdened by debt and pressured by job losses and other economic forces began to default on their credit card payments. Credit card debt was at the $945 billion mark last March. Although this figure may be lower than the $962 billion posted last December, it still represents an increase of around 25% from figures taken a decade before.

Credit card companies will have to make up for losses in some other way. The most obvious would be a tightening up of credit and a decline in investments on risky borrowers. Credit is also going to be more expensive, with annual fees making a come back and initial interest rates going up from their previous levels.

Although partly protected from the credit crisis which has reached global levels, Visa is still seeing a slow down in revenue growth as consumer transaction volume go down. Visa thrives on the transaction processing, not on fund lending. According to Saunders, the slowdown on credit card transactions will be markedly offset by an increase in electronic payment. Debit cards, he said are also going to be very important and will play a large part in the continuing operations of Visa.

June 4, 2009

Does The Credit Card Bill Address The Sickness Instead Of The Symptoms?

Among credit cardholders and within the credit card industry, the current buzz is the credit card bill and what it will mean for each and everyone of them.

The credit cardholders are hoping that the legislation in the bill will give them a better arrangement for paying off their debts and keeping their credit. The credit card industry is dreading the cut in profits that the credit card bill will bring.

Does The Credit Card Bill Address The Sickness Instead Of The Symptoms With the credit card bill in place, predatory practices by credit card companies will certainly be curtailed. The leeway that this will give to customers in paying off their debts will be very much welcome. It will certainly help them survive the economic crisis in a much better financial state. While there is going to be a considerable cut in profitability, credit card companies will certainly not be going bankrupt, their current doom-saying not withstanding.

All this is well and good but, does the credit card bill really go deep down to the root cause of the problem in the first place?

A study recently released shows a very dismal picture. The figures were taken in 2008 and it shows that more than 78% percent of households in the U.S. have at the least, one credit card. That translates to 91 million households. Each household, on the average has 5.4 credit cards. Figures from December 2008 show that the total credit debt is at $937 billion, each U.S. household averaging $8,329 in debt. Coupled with the very low savings rate of the U.S. and the picture gets very dismal indeed.

Consumers now know very well how credit card companies created policies which encouraged more debt among credit cardholders. By giving credit to subprime borrowers, credit card companies cashed in on their inability to pay off their debts by collecting only interest and penalty fees off them. As disgusting as this practice may be to the average credit cardholder, they must also acknowledge that no one really ever “held a gun to their head” to use their credit.

The credit card industry is, indeed guilty of encouraging a lifestyle where relying on credit and being lax on paying it off is the norm. For many years, American consumers have been very quick to use their plastic for purchases, some of which they could have done without. While doing so, they have also been very slow in paying off their monthly debts.

The credit card bill, fortunately helps in these matters. The bill, while discouraging the predatory practices of lenders, also penalizes cardholders who do not keep up with their debt payments. Even better are the amendments in the bill which put limits on who lenders can give credit cards to. With these amendments in place, only people who can actually pay off their credit can carry credit cards.

June 2, 2009

Credit Card Law Is All About Compromise

Debates about how good or bad the recently passed credit card law is has been going around even before the legislation got out of congress. There have been some valid points voiced out but, in the end, the credit card law is simply a compromise so that the credit card industry and the consumers survive the on going economic crisis and, perhaps build a better relationship between credit card companies and consumers.

Credit Card Law Is All About Compromise The credit card industry found itself on the verge of collapse when, at the outset of the currently ongoing economic crisis, credit cardholders began defaulting on their credit card payments. The industry found itself especially vulnerable because, for the past few years, they had been profiting mainly from credit cardholders who could reliably pay off the penalty fees, not the their debts. The credit card industry had found these types of borrowers to be virtual goldmines as they continued to pay the credit card companies without really seeing any substantial decrease in their debts. The profits the credit card companies took from these types of borrowers have not been publicly released but experts estimate the value to be quite staggering.

When the economic crisis hit, weak borrowers were the first to default. Coupled with the dry up of employment, the credit card industry soon saw record levels of defaults. In an attempt to stem the flow and recover, they raised interest rates and fees, even for their credit cardholders who maintained a good credit standing. The result was a national outcry that led to the formulation and eventual passage of the credit card bill.

The credit card bill addresses many credit cardholder concerns such as: unfair interest rate hikes, obfuscated industry practices and other predatory credit card practices. While credit cardholders are getting plenty of breaks from the credit card law, they won’t be given credit on a golden platter, either. Interest rate hikes will be controlled but, if the credit cardholder continues to perform poorly in terms of payment, they will get hit with high interest rates. Many predatory practices of the credit card industry will be curtailed but they credit cardholders will have to take responsibility for their credit card buying practices.

The credit card industry will certainly lose a lot of their profitability when the credit card law becomes active. However, it does not mean that the system will collapse entirely. They will just have to adjust to a less aggressive style of doing business. They basically have to return once again to basing credit availability on the capability of the borrower to pay off debt, not on how much they can profit from him.

In the end, the credit card bill simply reinforces what was once common practice in the credit industry: credit available where credit is due.

May 30, 2009

Bayh Says Good Credit Cardholders Will Not Be Penalized

Senator Evan Bayh made a stop in Fort Wayne last Wednesday to hold a dialog regarding the recently passed credit card bill and what it will mean for consumers. One of the hottest topics was the credit card industry’s assertion that responsible credit cardholders will be the ones getting penalized because of the practices of bad credit cardholders once the bill becomes active.

Senator Evan Bayh According to Sen. Bayh, the regulations included in the credit card bill are specifically designed to protect and help out credit cardholders who have been hit by high interest rates and fees because they have had to rely more on their credit cards when the economic crisis hit. The senator told reporters stories about people who saw such incredible interest rate hikes, some from 0% to 29%, just for missing the payment deadline by one day. Many of those experiencing such high interest rate hikes belong to the middle class and, according to Sen. Bayh, they were “getting ripped off by credit card companies”.

With the new law in place, credit cardholders who regularly pay off their credit card bills will be protected from interest rate hikes. Credit cardholders will also have more time to examine their bills, as credit card companies will have to mail the bills 21 days before they become due. In the past, the ruling was 14 days. Notifications regarding interest rate and fee changes will also have to be given to credit cardholders 45 days before they are to take effect.

The legislation will obviously provide protection to credit cardholders who are having problems with their bill payments and are keeping their credit cards active by paying only the minimum amount due. In the past few years, credit card companies have been making a lot of money off these kinds of customers – customers who do not default but who try to keep their credit cards active by paying the minimum amount, which does not really subtract substantially from their debts. This is going to end when the credit card bill becomes active.

Critics are therefore saying that because of the large loss in profits from bad credit cardholders, credit card companies are going to turn to good credit cardholders to make up.

“That is not going to be allowed to happen,” Sen. Bayh said.

He cautioned the credit industry from punishing good credit cardholders and said that should it happen, Congress will probably revisit the law to penalize such practices. He also said that the situation is not likely to become reality. Since the credit card industry is very competitive, a credit card company that penalizes good credit cardholders will probably lose their customers to another credit card company with a better offer.

May 29, 2009

Credit Card Industry Earnings Likely to Drop

The credit card industry is in an uproar over the legislations in the recently passed credit card bill. The credit card bill is aimed at legislating many credit card industry practices that cardholders see as unfair and deceitful. For the credit card industry, the credit card bill is a disastrous piece of legislation which will destroy their profitability and, according to them, limit the available credit for American consumers.

Credit Card Industry Earnings Likely to Drop During the past few years, the credit card industry has enjoyed high profitability. Many see that this is coming to an end. Although many see the credit card bill as the main reason for this, it may only be one of many factors.

Although the credit card industry is currently preoccupied with the threat of the credit card bill legislations, it is important to remember that the profitability of the industry was already going down even before talks of the credit card bill surfaced.

With the economic crisis, credit cardholders were unable to keep up with their monthly payments. Whereas many of those who struggled with credit card debt were able to at least keep up with the minimum monthly payments, they were ultimately defaulting when the economic crash came. The increase in credit card debt defaults greatly hurt the credit industry. Aside from that, it also proved wrong one common boast in the credit card industry: their capability to analyze a borrower’s risk and balance with the right interest rate.

Credit cardholder dissatisfaction over high interest rates and large financial fees is also another factor to consider. Considered the root cause of the credit card bill and its popularity, the dissatisfaction of credit cardholders over many of the practices of the credit card industry has been going on for some time. It was only a matter of time before the issue blew up on the credit card industry.

Now, with the credit card bill in place, credit cardholders are going to get the changes that they have been clamoring for. Unfortunately, many of these changes are going to hurt the credit card companies. The legislations on full disclosure of agreements and restrictions on interest hikes and financial fees will hurt the credit card industry the most.

In the past, the credit card industry has profited greatly from credit cardholders who were unable to pay off their monthly bills but did not default, only paying off penalty fees. The impact is hard to calculate, given the credit card industry’s reluctance to release any figures. Many, however, consider the amount to be quite high.

The credit card controversies, coupled with the economic crisis, have also given American consumers a crash course on financial responsibility. Many of them are going to be more careful with their credit card purchases, limiting credit card industry’s previously large profits from subprime borrowers.

May 26, 2009

Regulation Needed For Debt Settlement Companies, Say TASC

Regulation Needed For Debt Settlement Companies Following a string of controversies, TASC or The Association of Settlement Companies, have released a statement saying that they are pushing for legislation that will regulate debt settlement companies on both the state level and the national level. TASC is a non-profit organization which claims to be the watchdog of the debt settlement industry.

The debt settlement industry has seen large growth this past few months owing mainly to consumers desperate to find a way to control their debt. The economic crisis has severely curtailed consumer finances. Coupled with the fact that banks are cutting down credit to reduce risk on their side, consumers with debt are scrambling for every possible opportunity to cut it down to more manageable levels or eliminate it completely. Debt settlement, being one of the ways that consumers can do this, has therefore become quite profitable.

Unfortunately, many consumers have had bad experiences with several debt settlement companies. Some debt settlement companies have been downright deceptive in their practice and their customers ended up paying enormous fees without seeing any benefits. The practice has also become much publicized and some companies have been sued. These practices, while enriching some debt settlement companies, only hurt the debt settlement industry in the end.

TASC President Chris Kesterson recently said, “Fair legislation will help eliminate the bad apples from the industry while addressing the concerns of critics and regulators. At the same time, we want to continue helping consumers struggling with their debt to get back on their financial feet”.

Currently, TASC is at work with several bills such as California and New York’s the Debt Management Services Act. The one in California is Assembly Bill 350 while the one in New York is Assembly Bill 7268. here are also bills in progress in Nevada, Tennessee and Texas. The one in Texas is Senate Bill 2233, in Tennessee it is House Bill 1278 and in Nevada it is Senate Bill 355.

TASC has lobbyists working for these bills in several states as well as in the nation’s capital, Washington D.C.

With regulation in place, TASC hopes to restore the credibility of the debt settlement industry which has taken quite a hit due to the many controversies that have happened within the industry. Currently, many industry experts are skeptical of the capability of debt settlement companies to help out their customers. Some credit card companies are also wary of debt settlement companies and refuse to deal with them entirely.

May 24, 2009

Consumer Groups Hail Credit Card Bill

With the passage of the credit card bill from the Senate, consumers are seeing a bit of hope from the economic crisis. Consumer groups are also hailing the credit card bill and are excited to finally see a tough legislation for consumer protection come out of Congress.

Consumer Groups Hail Credit Card Bill Travis Plunkett from Consumer Federation of America recently said, “This is probably the strongest piece of consumer legislation to pass Congress in a decade.”

Although consumer groups consider the credit card bill as a step in the right direction, they feel that the bill can only provide partial protection for consumers against high interest rates and fees from creditors.

The credit card bill addresses many consumer concerns about troublesome credit card industry practices. Some of the most important amendments in the bill include prohibiting credit companies from retroactive interest rate hikes on old balances. Credit card companies are also required to provide fill disclosure to their customers regarding interest rate increases, transaction fees, and other related costs.

Dissatisfaction among consumer groups revolves mainly around the timeline for the implementation of the bill. They are also critical of the fact that the credit card bill can only slow down the surge of bills and does not provide a cap for interest rates.

Currently, once the President has signed the bill, it will become effective only after nine months have passed. This is mainly to give credit card companies some time to evolve their operations to meet the requirements of the bill. In the meantime, consumer groups are concerned by the fact that credit card companies continue to charge exorbitant fees and high interest rates on cardholders.

Although the bill puts a lot of limitations in the way credit card companies run their business, consumer groups say that there is still a lot of things that it allows companies to do which could be debilitating to consumers. For instance, although the bill puts restrictions on raising interest rates on old debts, it still allows credit card companies to hike up the rates on new purchases. It also does not stop credit card companies from changing their interest rates based on the cardholder’s payment history on another credit card.

Gary Schatsky, a financial planner in New York said, “It’s more than we could have expected in recent history, but in the end, it got watered down”. He also predicts that even as credit card companies are forced to make their terms more understandable, in the end, it all boils down to whether the buying habits of credit cardholders remain as they are or whether they learn from the credit crunch and change.

Card by Category