After Getting Bankruptcy Bill Passed, Credit Card Companies Screw Over Consumers ,Credit Counseling Services Inc problem ?
Gary Cone thinks there's got to be a better way than "The American
Way."
"People have a tendency to live beyond their means and, for most
people, credit is 'The American Way,'" said the construction
superintendent from Melbourne, Fla. "Most people try to get by as
cheaply as possible on a monthly basis. I always make a larger payment
than what's requested by the credit companies each month."
That's a good thing, because the credit card arms of two major banks --
Bank of America and Wachovia -- have increased the monthly minimum
payments customers must pay.
Cone, a client of Consumer Credit Counseling Services Inc., needs to
reorganize his finances because of the damage hurricanes inflicted on
his home and his ability to work.
"My company builds golf courses," he said. "It's been slow going for
me."
But for the millions of Americans carrying credit card debt, the banks'
move could be costly.
"The new policy of some banks to raise the minimum required payment on
credit card accounts from 2 percent to 4 percent will impact many
consumers," said Pamela Hart, manager of Consumer Credit Counseling
Services Inc.
"For those who either pay their credit cards in full each month, or pay
more than the minimum, there may be little impact," she said. "On the
other hand, for those who are barely getting by and paying merely the
minimum each month, the effect could be catastrophic."
Hart said that while the average American carries credit card debt of
about $9,000, the average credit counseling client she sees has debt
more in the neighborhood of $20,000 to $30,000.
She said the change from 2 percent of the balance to 4 percent of the
balance would translate into the monthly amount due for a client with
$9,000 in debt going from $180 a month to $360.
But for those who might be more overextended with $20,000 in credit
card debt, that monthly payment will change from $400 a month to $800 a
month.
When a consumer is in a debt-management program with a reputable credit
counseling agency, most creditors will allow the consumer to make
payments of 2 percent of the balance and will lower their interest rate
to allow more of the principal to go toward the balance.
However, there is a price to pay, Hart said. The consumer must agree to
destroy all of his or her credit cards and make a real effort to become
debt-free.
-This bill seems to protect the average person from having to shoulder
the weight of people who claim bankruptcy before its the only solution.
The bill would help discourage people from claiming bankruptcy
therefore curbing increases in interest