September 6th, 2019 | Updated on June 3rd, 2021
People in this modern world seem to push their purchasing power to the extreme. With the easy accessibility to loans and the liberal lending policy, it is even easier.
However, with such an increasing in their purchasing power people tend to lose control on their spending habits.
This means they are particularly lackadaisical in the use of their credit.
- As a result, they take on debts that are mostly unwanted pushing them further up the debt mountain, making it more difficult to come down.
- Moreover, people now do not seem to acknowledge or understand the depth of their credit problems which is the primary reason for their inability to control their spending.
The availability and use of credit cards have increased significantly over the years which have resulted in a magnanimous amount of credit card debts.
According to a survey report, it is found that on an average the credit card debt for each household is about $16,000, which is supported by the debt statistics of CareOne as well.
The report also found that people use multiple credit cards to make their purchasing much easier. The study report says that:
- On an average, the number of credit cards held by an individual is about 3.5 as in 2008 and
- An average American has six or seven creditor relationships at any given point of time.
All these facts are supported by The Survey of Consumer Payment Choice by the Federal Reserve Bank of Boston.
All these signal the need for a legitimate and suitable credit card relief as every individual carry a lot of debt.
Debt Relief Through Legislation
The abuse of credit starts at a very young age. According to the same Fed survey it is revealed that the average age at which any US consumer under the age of 35 first used a credit card is 20.8 years! Therefore, it is natural that by the age of 35 they will have used and paid a lot of credit card debts.
Sometimes they may have lost track of their multiple credit card accounts or overused their credit resulting in the accumulation of fees and interest with the outstanding balance.
This calls for a suitable debt relief option to get rid of it. Relief through legislation is one option especially to prevent such abuse in the first place.
This is in fact the most significant step in achieving credit card relief.
The CARD or Credit Card Accountability, Responsibility, and Disclosure Act of 2009 is a legislation that puts an end to the hidden fees and unfair rate hikes and makes it easier for the users to understand what they actually owe to their creditors.
Categorically, the credit card relief legislation does the following:
- It allows you to pay a credit card bill on the same day every month with no midday or weekend payment deadlines
- It provides you at least 21 calendar days from the date bills are mailed for making payments
- It helps you to understand better how long it will take to pay off the existing debts
- It also tells you about the total interest you will incur if you make minimal payments only through the monthly billing statements.
As for the credit card companies the Act makes sure that they:
- Direct the excess payment made by you above the minimum due towards the balances that have highest interest rate first
- Take your permission first before charging any amount over and above your credit limit
- Give you at least 45 days’ notice if you plan to assess the annual fees, or raise the interest rates on your future purchases or reduce the credit limit
- Post the terms and conditions of the cards on the website so that the cardholders can access it 24/7.
In addition to that, this Act also requires all credit card applicants who are under the age of 21 years to have a co-signer. Or else, they will have to prove their ability to pay the bills in the future and have adequate income.
Credit Card Relief Programs
If the prevention aided by the Credit CARD Relief Act is not enough for you to manage your debt and have amassed a huge amount of debt, then you can always turn towards a credit counseling agency to partner with and help you in achieving financial freedom by attaining true relief from your credit card debts.
The process includes:
- Speaking with a credit counselor to review your financial situation and accordingly suggest sound solutions that are tailored to your needs
- They may advise you on the issues ranging continuing to pay off your debts amidst medical crisis or reduced salary,
- They will teach you different topics to achieve financial fitness such as budgeting and staying within your means to get your spending under control.
To make sure that you attain your objective, the credit relief company will discuss the pros and cons with you regarding joining a Pennsylvania debt consolidation program.
Such programs can address several issues of different types of unsecured debts such as:
- Credit card bills
- Medical bills
- Store cards
- Personal loans
- Student loans
- Accounts in collection and others.
Ideally, there are two methods of debt consolidation that you can follow to achieve credit card relief. These are:
- Debt Management: This is a strategy that will help you to consolidate unsecured debt into one single monthly payment. This payment is sent to the debt consolidation company which then distributes the amount to the designated creditors. The debt consolidation company will work directly with the creditors to ensure that the benefits provided helps you to fulfill all your commitments over time such as interest rate reductions, reduced monthly payments and late or over-the-limit fee waivers.
- Debt Settlement: This is a plan that will help will help you to pay a debt in full but in reduced amount and prevent facing bankruptcy. Under this arrangement, the debt consolidation company will approach the creditors to negotiate so that you can settle your dues for a portion of the total amount outstanding.
If nothing helps then the company will suggest filing for bankruptcy.