Credit card issuers in support of debt repayment program
Filed under: Debt, Credit cards
The actions of credit card issuers have come under close scrutiny of late. In attempt to gain some positive press, 10 of the major credit card companies have announced changes in debt management plans allowing consumers the chance to lower payments and qualify for enhanced benefits in recognized credit counseling services programs.
This new tiered system qualifies consumers for special benefits they might not otherwise be able to tap into. Among the highlights: lower interest rates, waived late fees and minimum payments. The goal is to help consumers pay off their high-interest credit cards.
The hope is this plan will help many who were previously not eligible for a debt management plan under the former stricter criteria. Now, debtors may qualify for either a 1.75% or 2% monthly payment, depending on income.
Stephen Marcus, chief executive officer of A New Horizon Credit Counseling Services in Fort Lauderdale, Fla., said "We've always had a hardship program in place."
But credit card issuers weren't quick to recognize the value of such programs. "Public pressure has led to them embracing these programs," Marcus said.
Under the plan, those who qualify will work with certified credit counselors to establish a realistic budget based on individual circumstances. This, says Marcus, will hopefully help keep many from having t file bankruptcy.
The credit card issuers currently participating are American Express, Bank of America, Chase Card Services, CITI, Discover Financial Services, GE Money, HSBC Card Services and Wells Fargo Card Services.
Reader Comments (Page 1 of 1)
10-31-2009 @ 3:47PM
Alessandro Machi said...
The problem with these plans is they involve a third party. Whatever "savings" that could be achieved, get minimized because the third party is collecting a fee.
Hopefully, the credit card companies realize the importance of reducing credit card defaults. Why in the world would the credit card companies want a third party siphoning off a percentage of whatever the debtor can pay?
Customers that can afford to pay down their debts should be given the best, lowest interest rates to do so. Then, as these customers free up spending money every month due to lowering credit card payments, they can actually afford to pay for things with cash.
This in turn rejuvenates LOCAL ECONOMIES all over the country. This then creates a SECOND WAVE in which people who were really struggling suddenly find it easier to get a job because the first wave of customers were able to pay down their credit card debts and then begin spending money locally.
If the third party billing is equivalent to one or two percent interest on the debt, then that probably is a workable figure. But if the third party debt consolidation is billing a few percentage points, than that is money that could have gone to reducing consumer debt.
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11-02-2009 @ 10:03AM
Painesright said...
When "credit counseling" is noted on a person's credit report, most (if not all) mortgage lenders consider that the SAME as a bankruptcy 13. It could very likely cause someone not to qualify for a mortgage or cause them to pay a much higher mtg interest rate.
This is something people need to be aware of BEFORE they file for credit counseling or other debt settlement type programs.
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11-05-2009 @ 5:50PM
CSA Cares said...
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