The latest law passed to reform the credit card
industry has enabled individuals to have a say in the interest rates
charged on their account. Earlier, credit card issuers had a blanket
approval from card holders as far as variation in terms and conditions
was concerned. The card issuer could increase the interest rate without
any reason or justification. Credit card rates never went down. Rather,
it kept on rising.
The latest change in the law puts the
borrowers at an equal footing. If you are not happy with the rate
increase, you have the option of opting out of the account. This means
that your credit card accounts shall lapse and you shall no longer
enjoy the right to use the credit card. If you opt out, the interest
rates shall freeze. The interest rate charged on your account shall
continue to remain the same until you repay the debts in full. The
issuer cannot increase the interest rate once you have opted out of the
account.
The only point that you should keep in mind here is that
your card issuer has the right to double your minimum payment or insist
that you repay the entire balance within the next five years. If you
can afford to pay double the existing minimum payment or if the current
outstanding is such that it shall be automatically repaid within the
next five years, then you can opt out of the rate increase and choose
another credit card.
This option is a useful tool in the hands of
borrower. The option is the result of the growing realization that the
credit card industry has taken borrowers for granted for too long. The
stimulus package bailed out the credit card issuers but has started
imposing additional rules and regulations. This is the simplest but
most effective change that has been implemented.
You should keep
yourself updated about the various happenings in the card industry. The
next time your issuer increases interest rates arbitrarily, you should
keep in mind that you have the right to reject the increase and repay
the debt owed as per existing interest rates.
If
you are over $10
,000 in unsecured debt it would be wise to utilize a
debt relief network instead of going directly to a debt settlement
company. Using a debt relief network guarantees that the debt
settlement company you choose has been certified and has established
success in negotiating settlements. They are free to use and a good
starting point to begin your debt relief process.
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