The banking industry is going through a lot of changes recently. It is the time of unrest when both the banks and the consumers are confused about the effects that the new laws would have on their financial future. The CARD Act 2009, is forcing the banking institutes to change their credit card policies. Similarly, it is likely to have effects on the consumer behavior as well.

The new law may demand some changes in the old ways that were used by the consumers to improve their credit scores.

New ways to increase your score

The financial institutions and banks are fine tuning their lending practices to keep their profit rising even in the changed scenario. As the new regulation is expected to be working in favor of the customers, banks are looking into other channels to retain the revenue of their profitable credit card business. Hence, the customers might have to abandon some of the well known methods of increasing credit scores and adopt new ones.

Carry more credit cards: Earlier the customers were warned against carrying too many credit cards as they may run into more debt if they do so. But since the banks are now quick at lowering the credit limits on the cards, your debt-to-credit ratio may go up when your credit limit would go down. Hence, to keep your debt-to-credit ratio unchanged you may have to increase the number of credit cards in your wallet.

Maxing out credit cards: It was not a good idea before to utilize the entire limit of a card but with the new regulation, it may now worth maxing out some of your credit cards. Some creditors, especially the charge card lenders, don’t report the limit of their cards to the bureaus and while calculating your score FICO would consider the highest amount spent on these cards as your limit. Maxing out these cards may result in a more favorable debt-to-credit ratio.

No longer lower APR: The idea of requesting lower APR on the cards can backfire under the new circumstances. Earlier it was used widely by the consumers who were seeking relief from credit card debt. But such a request may now trigger a credit check and if you don’t have a satisfactory payment history, the creditor may increase your rate instead of lowering it. You may rather look for a balance transfer option if you want to lower the rate.

It may cause some initial confusion amongst the consumers as they are asked to abandon their old practices of improving credit scores and some may also experience a drop in their scores inspite of their best efforts to maintain it. It would be wise to be patient till the new legislation comes fully into effect and review your credit card agreement to understand your options better.

Payday loans may be quite handy when you need that emergency cash but what you have to remember here is that you have to pay them back on time. Payday loans, if not paid back in time can be quite troublesome and before you even realize, you may be in trouble. Payday loans can be used by anyone who has a checking account and a steady income.

It is easy to get such loans as they don’t require any credit checks and often it is seen that those who don’t get access to credit cards, turn to these loans.

Why you should not get payday loans

The idea of getting fast cash may seem great, but it has its own disadvantages and that is why it may not be recommended. Take a look at the top 4 reasons why you should not get payday loans:

Payday loans can bring a lot f stress along with them. It may be quite beneficial in case of emergencies as it allows you to have fast cash, but let us also take a look at the disadvantages of payday loans.

1. Costly loans: Payday loans usually have a fee of $15 – $25 for every $100 that you borrow for a period of 14 days. For example, if you borrow $1500, you may end up paying $375 extra as fees for the money lent within half a month.
2. Costlier extended repayments: If you are unable to pay off your loan within the said time period, your payday loan can get costlier. This means that on top of the fee and the principal amount that you have to pay back, you also need to pay half of the principal amount as interest. So, if you are opting for multiple extensions, you may get deep into debt and have trouble paying it back.
3. Law regulations: There are limits to the amount of dollars you can borrow and is regulated by the attorney general’s office of your state. Some states allow only $400 – $500 while other may allow more than that.
4. Direct withdrawal from account in  internet lending: If you have taken payday loans through internet lending, you may have to fill out a form where you are required to give out your personal and banking account information. Not just that, you may also have to give out information on your social security number as well as your employer information. On the date when your payment is due, this amount will be directly withdrawn from your account. Giving out your personal information may not be a very healthy practice to follow especially since there are so many cases of identity theft reported by so many individuals. Moreover you may also need to face payday loan collection harassment if you don’t pay them back on time.

Before you reach out to easy cash like these, beware of what might follow.

When looking for an online debt consolidation service, you may be confused as to which company is better to deal with. You may come across negative feedback posted on the web, but that isn’t true always. Such negative feedback often leads to misconceptions about the companies. That’s how the web works. If there’s a single person who mistook a good company for a bad one, he may spread the word on the web and the result is a whole lot of misconceptions which leads to mistrust and does affect the reliability of a company or a community.

Here’s one such incident in which a person named Jeff Leatherman somehow misunderstood the way the DebtCC community works and sent us a mail.

Here’s the mail Jeff sent:

Hi my name is Jeff,I almost fell pray to your company but thankfully i checked the Internet first for credit repair company scams.The funny thing is your company came rite up and i red several E-Mails like this.

I enrolled in a Debt Consolidation program with debt consolidation care Corporation in November 2004 and since that day they have not paid my creditors and lost payments they withdrew directly from my checking account. The company is rude, unprofessional and could care less about helping people manage their debt

I found out in the fall of 2005 that my creditors were not being paid by phone calls from my creditors. FCC said they contacted my creditors and informed them they would be unable to make payments. debt consolidation care lied they never informed any of my creditors. debt consolidation care took two payments out of my checking account two months consecutively and did not pay for the overdraft fees on my account.

debt consolidation care does not disburse the monthly payments in a timely manner and does not know if they even paid your creditors. This past month again my creditors have not received their payments despite the money being withdrawn from my checking account by debt consolidation care .

The customer service representatives are rude, unprofessional and incompetent.

My credit has been destroyed and I had perfect credit prior to enrolling in the program. I was only looking for a way to consolidate my debt as I always paid my creditors on time. Instead of digging myself out of debt, I have ruined my credit due to no fault of my own except for choosing a horrible debt consolidation program.

I advice anyone to not use debt consolidation care .

John
Johnson, Florida
U.S.A.
Click Here to read other Ripoff Reports on Debt Consolidation Care

So needless to say i do not think i will be using your company.Thank god for the Internet so you can’t rip off smart people who at least do their homework first.But i am sure your company will get plenty of people to screw out of their hard earned money and make things worse for them than it all ready is.I hope you can sleep at night knowing how you screw people over when they are in need.But you know the saying what goes around comes around so i am sure their is a sure thing spot for you in hell,hope its hot.

Here’s the reply he received from the DebtCC Community:

Hi Jeff,

I think you have mistaken about our company. We run a debt forum on our website where people come and discuss about their debt and we do not provide financial services to any consumer.

We made our revenue which pays for the servers and bandwidth through Google Adsense advertising and selling leads.

DebtCC has never taken money out of any ones bank account. Once again you are mistaking our company for some other company.

Hope you would understand.

However, the customer somehow understood he was mistaken and sent us his apology. Here’s what he’d said:

Please except my apology.I went back to your website and checked it out more and you are very rite.I guess i am confused their must be a company out their that you pay to help with your credit problems that has the same name as your company.If you type in your company name with scams on the end of it you will understand where i was coming from.But again i am very sorry for jumping the gun and for what i said to you in my E-Mail.

Hopefully this clears any confusion anyone may have on how the DebtCC community works.

With the President signing the new Credit Card Act of 2009 into law, how will your credit habits change – or will they? It is said that many users can now avoid the increase in rates on the existing balance and will find more time to pay on their monthly bills.

Let us take a look at the highlights of the new laws:

• Restrained hike in interest rates: The new law allows hikes in interest rate on existing balances only under limited conditions. This could come into play when a promotional rate ends or if a card holder makes a late payment. If there are new transactions, the interest rates on such transactions can increase only after the 1st year. For any significant change in terms of accounts must be made after a 45 days prior notice of the mentioned change.
• Billing practices: The due date for credit card payments will be same for all months and a notification of the bill must be made at least 21 days in advance of the due date. Payments made by customers will automatically go towards the highest interest rate balance first in order to pay it off faster.
• Time frame to pay off debt: Credit card companies will be using simple language on all materials related to a customer’s account and at periodic intervals display on the statements, the time customers would require to pay off the debt if they made only the minimum payment each month. The statement must also contain information on the interest charged each time the customer made a minimum payment on his dues.
• Opt for an overdraft program: According to the new law, customers will no longer be enrolled in to an overdraft program automatically, but will have to express the desire by opting to be enrolled in one. Hence, if any card holder exceeds the limit on their card, the card will be declined unlike in the old rule where the consumer could still transact in lieu of a fine.
• Laws for young customers: Individuals under the age of 21 looking for credit cards must show proof that they have the means of paying off on their cards or get a co signer before they can be given a card.
• Finance charges: The two-cycle or double-billing cycle model is being done away with. Finance charges will be computed based on purchases made in the current billing cycle instead of going back to the previous cycle in order to calculate the interest charges. This relief on double-billing-cycle should help debtors to pay off their debts on time.
• Subprime credit card relief: If you hold a subprime credit card, creditors can no longer charge more than 25% upfront fees on your available credit limit in the first year of the card. Some credit card issuers are thinking of charging high interest rates on these high risk accounts instead.

What credit card holders must remember here is that these laws do provide them some relief but do not protect them from every thing. Although creditors need to give customers a 45 days notice before increasing their rate, the new law has not put any cap on the percentage of hike that creditors can levy. So, no matter what the laws are, make sure you use your credit card wisely so that you don’t run up debts you cannot manage to pay back.

More and more students are now looking for student loans to finance their education and hence there is a huge demand for credit. This in turn has resulted in a huge gold rush for the banks and other private corporations.

Real estate used to be a stable area for investment, till a few years ago, but the inflating home prices and the increasing rate of foreclosure on mortgages resulted in the whole pyramid collapsing. However, there are trillions of dollars of investment money looking for a secure place. The new student loan bubble is seen as a large investment area where bankers and investors have plans to experiment in.

Why is this steep rise in demand for more loans?

It is said that real wages for the majority of the people have stagnated for many years while costs for education, health care, housing and other costs have continued to grow. Hence, many people have been forced to pay for essential things busing loans and this constant need for loans created a pool for debt. This is where the scope for investors to put in their money comes. The year 2008 – 09 saw an increased rate of approximately 25% of the total amount of money borrowed by students and received by the schools.

The rising levels of borrowing money for education may be a contributor to the increasing cost of college. The idea behind this is that, as the costs go up, people borrow more and this urges prices to rise further and then the cycle goes on. This results in students already with thousands of dollars in debt when they are out of college.

While they are still students, they do not much understand the consequences of a loan or the burden of repaying them. It happens that these students may not always land with jobs that pay enough for them to be able to pay off their loan amount and hence end up with deferred debts. However, the interest continues to accrue on their debt and they go deeper down the debt pit. Students may be thinking that once they get out of college, they will look for a job, get one and then repay the loan. With a more or less sour economy it is not as straightforward as you may think it is.

Is there any way by which this burden may be reduced?

The government may be able to help in this regard. In fact it has already focused on fixing student loans. For existing students who already have a lot in debt, an increased tax credit may offer some re-enforcement. In addition there should also be a decrease in the default rate of interest and also in the need for a full on student loan.