Debt Consolidation-understanding The New Rules Of Credit Cards

Debt Consolidation-understanding The New Rules Of Credit Cards

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Some people have used their credit cards as a kind of personal debt consolidation approach, in fact during the property boom quite a number of people used credit cards to secure properties that in reality they could not afford to buy. However in the last 4-5 years, the credit card companies have gone for much stricter acceptance criteria for ready and willing customers, with new rules which do not encourage this type of private personal debt consolidation approach. "Quality lending" seems to be the motto of the day and a 3-tier market has been developed for customers willing to have a credit card.

• Customers having good credit score would face no problem in acquiring a credit card and can enjoy the privilege of picking among the best and most convenient deals available. There are seriously big advantages for those who are in this position.

• However, you can also get a credit card even if your credit rating is not too impressive. It depends on the credit provider involved. However, in all cases, you must be prepared to pay steeper interest rates than the advertised rates.

• Have a poor credit score and you will be flatly rejected for a credit card. As the credit status of many people has been badly affected during the bad financial turn of the last years and many were forced to go for debt consolidation, an increasing number of people are refused a credit card these days.

What Are The New Rules?

The credit card world has gone through a process of change as new rules are being led out courtesy an agreement between the credit card companies and the BIS-Department for Business Innovation & Skills). The most vital of these changes are:

• From now on, the customers will have to pay off the borrowing with the highest interest rate first when it comes to monthly repayment. Earlier, they would have needed to clear off the lowest interest rate borrowing first, which encouraged this type of personal debt consolidation practice.

• Customers can also now reject a credit limit or rate increase. They will get sixty days to reject such rate increase from the day of issuance of the notice. Their accounts will be closed if they choose to do so, but they will be allowed to pay off the outstanding balance at the current rate.

• If the customer is going through financial hardship, the company cannot increase his credit limit or interest rate.

• The minimum repayment in case of new cards must at the least cover fees, charges, interest and one percent of the debt, again discouraging the personal debt consolidation method.

Other important changes include thirty days notice of credit limit or interest rate increase, improved automated payment option, a new minimum payment warning and else.

Although these changes auger good for the customers, many are also concerned that credit card offerings in the future will become less attractive than they are now. As these changes have affected the providers, they would look to balance or compensate in other ways. It is more than likely a matter of personal opinion as well as circumstances which would sway you to be for or against the new rules, which discourage personal debt consolidation but are possibly a good measure in some ways.

About the Author:
Jackie writes for the blog of UK debt consolidation specialist company,
Abbot & Edwards. They are on hand to offer free debt consolidation
advice if you need to find out how you could be helped now.
http://www.abbotandedwards.co.uk/debt-consolidation-uk.htm



Article Originally Published On: http://www.articlesnatch.com


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