Dallas, TX -- (SBWIRE) -- 03/24/2010 -- The CARD act, which went into effect in late February, was designed to protect consumers from unreasonable credit card practices. Creditors, concerned about potential profit loss due to these new regulations, are already finding ways to charge their clients more by increasing interest rates and creating new fees. Debt Settlement America offers tips for consumers to protect themselves from these new practices.
Under the CARD Act, credit card issuers are no longer able to change interest rates on existing balances in most cases. Creditors do have the right to raise interest rates on existing balances if a consumer is more than 60 days late on a payment on that account. Consumers should make all payments on time, which will keep them free from late fee charges and interest rate changes on current balances. If a creditor changes the interest rate for new purchases, a consumer may decline the increase. However, this may result in the creditor closing the account and requiring the consumer to pay off their balance in five years or less, which may dramatically increase the required minimum payments on the account. For this reason, the safest route is to pay off all balances each month, and to pay down any cards with current balances.
A new feature of credit card statements will be the inclusion of information on paying off balances and making only minimum payments. Clients will now be notified exactly how long it will take them to pay off their balances if they only pay the minimum amount. In addition, the statements will disclose how much consumers will pay in total (including interest) to pay off the account if they only make the minimum payments. Many consumers are likely unaware just how ineffective their monthly payments are in getting them out of debt. Anyone who is able to should always pay more than the minimum payment. This will reduce the interest, the total balance paid overall, and the time needed to pay off the debt.
Creditors are no longer allowed to charge over-the-limit fees, and instead must decline purchases that will send customers over their credit limits. Customers may opt-in to a program that will allow over-the-limit purchases if they so choose. However, debtors should keep in mind that creditors have already begun dramatically reducing credit limits on open accounts, and are expected to continue to do so. Consumers should keep track of credit card limits to make sure they have the available credit they may be expecting. This will save credit card holders from any potential embarrassment and will help them keep track of their personal finances.
Though credit card companies are now required to give 45 to 60 days’ notice of most changes to accounts, consumers may not always recognize the notices. Some may mistake the notices for junk mail or unwanted solicitations, which may be mailed out as individual letters or may be included as inserts in mailed statements. To keep on top of all changes, credit card holders should read all mail from their credit card companies. This will not only ensure that consumers are well aware of their account terms, it will also give them the opportunity to opt out of any changes they do not approve of before the change can take effect.
In the midst of all of these changes in the credit world, consumers may find themselves overwhelmed with debt and unsure of what to do next. One option for consumers is to consider working with a debt settlement company. Debt settlement programs work by negotiating on a consumer’s behalf to secure settlement on their unsecured debt. With programs typically lasting three years or less, debt settlement allows a consumer to pay off debts owed to each creditor for less than their current balance with one lump sum payment. The settlements are binding and ensure that no further collection efforts or legal action will be taken on the settled accounts.
Debt Settlement America (DSA) is headquartered in Dallas, Texas and services clients across the nation. Since its inception in 2004, DSA has established itself as a leader in the debt settlement industry. DSA is a member of the US Chamber of Commerce, the Texas Association of Businesses, the American Bankers Association, and a Gold level member of the International Association of Professional Debt Arbitrators. DSA has been recognized as a TASC Best Practices accredited member company for the past three years.
To learn more about Debt Settlement America, or to receive a consultation free of charge, go to http://www.debt-settlement-america.com or call 866-387-3328.