New Credit Card Act Ensures Debt Help For Consumers

Passed to better protect card holders, the new credit card act as of late February 2010 is providing debt help for those in need. The act presents many new rules, though most of them are geared towards protecting the average consumer.

Creditors will now have to show on their bills how long it will take you to pay off the balance via minimum payments. This will help consumers create a plan for debt relief by discouraging large expenditures to the credit card, while encouraging them to pay above the minimum balance each month.

Companies will also have to print warnings about interest hikes that occur if consumers pay late, but the act prevents them to increase interest for the first year they have the card. If the interest is increased, the new 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 must now be delivered at least 21 days before the actual payment is due, which will increase awareness for how income should be budgeted. Once the payment is made the money goes toward the balance with the highest amount of interest, rather than left up to the credit card companies discretion. Consumers must be notified 45 days prior to creditors raising interest or fees on the card. Credit card companies must also receive approval from the consumer before they allow a charge over the credit limit.

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 a business day to process before penalties or interest hikes are applied. Fees are also capped at 25 percent of the credit limit.

The act promotes debt relief for young people by not allowing those under the age of 21 register for credit cards without a qualified co signer. Credit card companies can also no longer sell on college campuses, which is expected to spur a great reduction in the number of students who are deep in unsecured debt and unable to pay their minimums.

One of the ways to deal with large amounts of unsecured debt is debt settlement. A firm performs debt negotiation on your behalf so you pay less than the total balance. Originally when the Association of Settlement companies was established in 2005, there were 300 firms in the sector, Executive Director David Leuthold said in a Washington Post article. Debt settlement has grown in popularity in the wake of the recession, so that now, he said, about 1,000 firms handle $18 billion in debt across the country.

Greenshield has been responsible for $50.8 million in debt settlement for their 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.