It is expressed that credit card debt averages about $850 billion dollars in the United States. This number has significantly increased since the 90’s. It is said that the average debt for over half of card-holding households that do not pay their balance in full every month is about $17,000. This is a ridiculously high number and has caused the government to step in and take control of the situation.
Lately, credit card companies have been deceptive and unlawful with their interest rates and payment requests. However, the Federal Government has decided to end these practices and make it easier on consumers by mandating rules for the companies. The plan behind these rules is to establish guidelines in which the company must follow in order to create fair and predictable outcomes for credit card users. Also, these rules will make it more difficult to raise interest rates and allow more time to pay back credit card and other debt.
Millions struggle with credit card debt and the government feels that these rules will allow people to gain more control with their financial situation. After receiving criticism for not stepping in sooner, the Federal Government decided that something must be done about the subprime mortgage crisis. These mandates on credit card companies allow more freedom and options with debt, as well as a solution to unfair practices.
Many think that this new mandate is a relief for credit card users; however some feel that it may not be enough. Also, the banking industry is against these rules because they predict higher interest rates as a result.
Some of the rules are as follows:
1.) No deceptive offerings of credit.
2.) No raising interest rates on a balance that is pre-existing.
3.) No assigning payments among balances that have different interest rates.
4.) A ban on quick repayment dates. Borrowers must be given enough time to repay the debt.
5.) No fees that exceed the credit limit because of holds on the account.
6.) No “double-cycle billing” which causes unfair computer balances.
7.) No added fees or security deposits for offering credit.
These rules are expected to be in place by January 1 of next year, and should cause a significant decrease in the amount of debt throughout America.