Credit card debt is something that often plagues many consumers as more and more individuals have become dependent upon credit card use and often allow interest rates to go unchecked or simply practice poor financial habits. However, certain acts and rules by the credit card industry have set cardholders in a position where they are unable to handle certain fees and penalties.
Yet, new credit card rules that have gone into effect thanks to the Wall Street reform bill are set to protect cardholders against certain late payments and additional fees. Some of these new rules include the inability to charge more than $25 for a late payment or charging customers who are not using their cards. While there are certain extreme cases where some of these new credit card rules may not apply, it’s hoped that these constraints that have been placed on the credit card industry will allow users to combat credit card debt more easily.
One typical problem that credit card users have had is they simply make minimum monthly payments but continue to spend. Obviously, spending outside of one’s financial means will always lead to a difficult situation, but information that must now be disclosed on credit card reports show cardholders how long it will take them to erase their debt and how much money they will pay overall if they continue to make minimum monthly payments. This has allowed for many cardholders to form repayment plans that allow them to get out of debt faster and at less cost overall.
Certain constraints on late fees may also be helpful since there are now rules that state if a customer is late on a minimum payment their fee cannot exceed the amount of that payment. While, in a case such as this, a consumer may end up paying double the amount they would have originally paid, this is at least some alleviation of burdensome fees that are excessive.
However, despite the fact that credit card companies are now being limited to the amount of fees and fines they can charge, it comes down to a consumer’s responsibility and financial practices as to whether they will be able to erase their credit card debt quickly or handle their credit cards at all. While some of these practices by credit card companies have been abusive, cases where cardholders are excessively irresponsible may not be subject to these protection acts and rules. Cardholders who may want to erase their credit card debt or gain a better hold on their credit card finances will simply have to begin using smart financial habits and making purchases on their credit card that are well within their means to repay.