Are You Looking for Credit Card Relief?

Monday, June 29th, 2009 at 11:53 pm

There is much talk these days about credit card relief, which is a welcome break for people with outstanding credit card balances who are barely making ends meet. But before debtors take too deep a breath, they need to realize that this is not a bailout or free money – the government didn’t rack up those credit card charges, the users did.

Credit card relief needs to start with education. People need to realize that purchasing on credit is not always the best option. That loan has to be paid back, whether you lose your job or not. Rarely do people truly read the fine print of credit applications any more, thinking that they all say the same thing. However, in recent years, credit card companies have been revising these agreements and users are still not reading the changes.

Congress is working to help debtors with credit card relief, but people with outstanding balances need to read this fine print carefully in order to fully comprehend what to expect. Some of the relief actions include requiring creditors to give 45 days’ notice of a rate increase; outlawing the practice of universal default, which increases rates based on unrelated activity such as a late payment on ANOTHER account; limits on overlimit fees; and banning the issuance of credit cards to young adults without a co-signor. Additionally, Congress is seeking to limit interest rate hikes to apply to new debt only – that the existing debt must remain at the lower rate so the consumer has the opportunity to pay the debt off at the rate at which they incurred the debt. However, most of these relief plans are not scheduled to go into effect until 2010.

So Congress is urging people with credit card debt to re-evaluate their financial wellness. Destroying the cards and making a plan to pay the debt down with every available resource is key – income tax refunds and employment bonuses are perfect examples of extra money that can be used to eliminate the debt. Vacations and new furniture may have to wait a year or two while you get a handle on your spending habits and a plan for getting your debt paid off becomes a priority.

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