Posts Tagged ‘interest rates’

United States House Financial Services has approved a proposed bill expediting the implementation of CARD Reform for Consumers Act of 2009, a law which overhauls the credit system that is supposed to be carried out on February 2010, on December this year.

On the other hand, the HR 3639, the Expedited CARD Reform for Consumers Act of 2009, does not apply to prepaid gift cards – which are already printed and will be out in the market soon, and small credit card issuers – which control less than 2 million cardholder accounts. The credit reform law will be effectively implemented on small market such as these on February 22, 2010.

Meanwhile, Senate Banking Committee Chairman Sen. Chris Dodd recommended the immediate termination of increased interest rates set by the card issuers.

These actions by both legislative houses were prompted by the continued increase of rates for 700 million credit card holders.

Comparing last year’s rates, cardholders complained that they have been paying four times higher in interest rates due to charges on late payment and other additional fees.

In a recent study conducted by Pew Charitable Trust, a non-government organization which is committed to serve the people by improving public policy through information dissemination, they found out that contracts for almost 400 cards, issued by banks and 12 largest credit companies, allow card issuers to raise interest rates, apply penalty fees for late payments or over-limit transactions.

These terms are the same policies prohibited under the CARD Reform Act, which was signed into law by President Barack Obama early this year. The Congress has divided the implementation of the law into two phases to give credit card companies more time to change their policies. The first phase, which was implemented last August, entitles the consumers a 45-day notice from the card companies and banks before changing their interest rates. The second and last phase, which is supposedly carried out next year, bans the card issuers to increase their interest rates on existing balances. The law also gives the consumers five years to pay the loan that has fixed interest.

However, instead of adjusting their policies to meet the reform act requirements, the banks, which control more than 90 percent of credit cards in the marker, and credit card companies have changed and rewrote contracts to their advantage. As a result, credit card issuers have free-hands in increasing their interest rates and eventually raking more profits at the expense of their consumers.

In fact, the credit card companies have started increasing the median annual rate in December 2008 and July this year by two percent or more – one of the measures that will cover the projected losses due to continued climbing of unemployment rate and the implementation of CARD Reform Act.

Other measures adopted by banks and credit card companies are re-pricing program which is forcefully employed to its existing consumers, some of them have cut their rewards programs, and applying additional charges for annual fees, between $29 to $99.

Writer: Gani

A price comparison Internet company is now urging the government to formulate a better regulation of credit score ratings for consumers to encourage people to seek better credit card deals and maximize their financial resources.

Toby Van Der Meer, managing director of money at www.moneysupermarket.com, notes that cautious and wary consumers are not keen on getting even the best credit card offers, as their application could potentially impact their credit score rating in a negative manner.

Van Der Meer notes that the current credit rating system places consumers at such a disadvantageous position when they are shopping around for the best offers.

While newbies in the plastics would jump at the next opportunity to apply for a credit card, those who know better easily ignores a chance to get better interest rates and keep their existing cards instead. In some cases, the consumers would rather not maintain a credit card at all.

Each time a consumer applies for a credit card, it gets filed, documented and referenced upon for their credit score rating. This means that both credit card application approvals and rejections are kept on record. Naturally, some applicants who shop around get mostly approvals, and some others get mostly rejections. Whatever the case may be, these application records affect the credit score rating of the credit card applicants. Ultimately, it becomes a “no-win” scenario for the consumers, who are the prospective credit card applicants.

Consumers who want a clean and safe credit score rating would rather resist applying for a new credit card than risk tainting their credit score rating.

“Our research shows that many consumers don’t understand the impact shopping around has on their credit rating,” Van Der Meer stressed. “And those that do may be missing out on the best deals because they’re reluctant to make numerous applications in case it has a negative effect on their credit score.” In conclusion, Van Der Meer says, “(It’s) effectively a no-win situation at the moment.”

It is for this reason that the price comparison web site moneysupermarket.com has been lobbying the government to provide an improved system to regulate credit score ratings.

“We have asked the Treasury Select Committee to press for change in this market,” Van Der Meer announced. He added, “We need to see greater transparency and fairness in the consumer credit market, so consumers can shop around freely for products without any impact on their credit files.”

Writer: Arlene

Credit cards for small business owners provide viable financing to help start up your business. However, before you make a decision to get one, you have to do intensive research to know what these credit cards offer.

Important Information

There are two kinds of credit cards for small business owners and these are the secured and the unsecured accounts. A secured credit card requires a savings account with a minimum deposit. Other banks require collateral for this kind of credit card account like personal assets such as cars and even houses. You will even be asked to sign a personal liability agreement with this kind of account. If your business is unable to meet payments on time, your personal assets will be at risk.

Unsecured credit cards, on the other hand, do not need these requirements and they often come with lesser interest rates. However, they can only be secured by small business owners who have already established an unblemished credit history. This means that you have to establish a good credit rating as a business entity first before you can avail of this account.

The payment terms for credit card balances oftentimes depend on the bank that you are using. There are discounts that you can avail of as well as other cost-effective options if you are able to make your payments on time.

Credit cards for small business owners are now very popular because they come with great benefits. Being aware of these lets you know what you are getting yourself into.

The Benefits

Credit cards for small business owners can help you build a viable credit rating for your business. With these credit cards, you will also have a tracking system for your expenditures that is easy to understand.

These credit cards for small business owners will also enable you to separate your personal and your business expenses. This way, spending limits can be established on your separate credit accounts. You can also expect additional perks for your credit card usage. These could be in the form of travel opportunities and office supplies given out by banks as special rewards.

Comparing what banks offer on credit cards for small business owners is a smart way to make an informed decision on getting one. You can either get a small business credit card from your current banking company or you can go to another bank that offers more favorable terms. A wise choice on where you get your credit card can spell the difference in the success of your business.

Writer: Leigh A.

Credit card debt can happen to anyone and if allowed to remain unchecked, can snowball into a real financial burden.  This is not only stressful but can also mean money wasted on interest rates and penalty fees – money that can otherwise be put to use elsewhere and for much better purposes.

If this is the situation you find yourself in credit card debt consolidation may give you back control over your finances and your freedom.  Credit card debt consolidation is the process of combining all your credit card debts into one in order to get a lower and easier payment term on all debts.  The most common ways of doing this is through a credit card balance transfer or taking out a debt consolidation loan.

A credit card balance transfer is the process of transferring the balances of all your credit cards to another credit card which offers a lower interest rate and minimum required payment. A debt consolidation loan is simply taking out a loan to pay off outstanding credit card balances.

First, determine the amount of debt to be consolidated and know the exact amount you owe.   Then, consider interest rates and payment terms in your option of choosing.  Take the time to shop around for the lowest interest rates on the market as this will have a significant impact on how soon you can get rid of the consolidated debt.  In some cases, you can also negotiate the length of time it takes for you to pay off everything. While you would want to spread out convenient payment amounts over a certain span of time, you don’t want to take too long on the process either.

It is important to stop using your credit cards while on a consolidated debt payment process so as not to rack up additional debt.  In this regard, it is helpful to also consider the stability of your income and the amount of “breathing space” you have for any unexpected expenses that might pop up while on the consolidated debt payment process. Make sure there is enough money left after making payments to take care of basic needs and perhaps the occasional treat.

After all is said and done, make sure you have learned the lesson in the process.  While credit card debt consolidation may get you back on track financially, the best policy is still to exercise self-discipline.  Tackle the problem at the source by resolving to curb overspending and to exercise better money management.

Writer: Flora