New Credit Card Act Ensures Debt Help For Consumers

Passed to better protect credit card customers, the recent credit card reform legislation is providing debt help for those in need. The act presents many new rules, most of them geared toward protecting the average consumer. 

Bills now must show how long it will take the cardholder to pay off the balance via minimum payments. This will help consumers create a plan for debt relief by discouraging extravagant charges to the credit card, while encouraging them to pay above the minimum payment each month.

The law also requires companies to print warnings about interest hikes for late payments, but the act prevents them from increasing interest for the first year. If the interest increases, the higher rate will only apply to new charges made on the card after the change. This forces the credit card companies into a kind of debt help, as the interest can be applied to a smaller amount of the total balance.

Bills now must head for the consumer at least 21 days before the payment is due. Once the payment is made the money goes toward the balance with the highest amount of interest, rather than leaving that choice up to the credit card companies’ discretion. Consumers must be notified 45 days before a creditor can raise interest rates or fees on the card. Credit card companies also must receive approval from the consumer before they allow an over-the-limit charge.

Card companies are no longer allowed to do any double billing cycles, so interest can only be imposed in the current billing cycle. Payments made on holidays or weekends will be allowed one business day to process before applying penalties or interest hikes. The law also caps fees at 25 percent of the credit limit.  

The act promotes debt relief for young people by not allowing those under the age 21 to register for credit cards without a qualified co-signer. Credit card companies can no longer sell on college campuses, a move expected to drastically reduce the number of students deeply in unsecured debt and unable to pay their minimums. 

One of the ways to resolve large amounts of unsecured debt is debt settlement. A firm performs debt negotiation on your behalf so you pay less than the total balance. When The Association of Settlement Companies was established in 2005, 300 firms existed in the sector, TASC Executive Director David Leuthold said in a Washington Post article. In the wake of the recession, debt settlement has grown to about 1,000 firms that handle $18 billion in debt across the country.

Greenshield has been responsible for about $50.8 million in debt settlement for its clients. Greenshield Financial Services is a Financial Health Management Company that specializes in a debt settlement program as alternatives to debt relief, debt help, and bankruptcy to help you learn how to get out of debt.