How The Credit Card Act Affects Loans For The Unemployed
The new credit card act that goes into effect this year has some effects on loans for the unemployed. Actually, that should be stated differently. The high rate of unemployment combined with the new credit card act, will have an impact on individuals who are unemployed and are attempting to get a loan. The new act itself has many new benefits for consumers, but the high rate of unemployment may overshadow those benefits.
One of the more attractive benefits of the new credit card act is, you get to see how long it would actually take you to pay off the balance, if you only pay the minimum monthly payment. It’s almost comical when you finally see your statement. A $3000 balance, for example, might show something ridiculous like 16 years to pay off, if you only pay the minimum. Conveniently, they also show you how long it would take if you decided to make just $10 or $20 over the minimum every month. It’s surprising. Something that was 16 years, is now whittled down to between 3 and 5 years.
Other features of the new act include a 45 notice of any changes in terms. This means that if the credit card company decides to change your APR, they have to notify you at least 45 days in advance. If you do not agree with the terms, then you can close the account.
The American Bankers Association stated that the high rate of unemployment, along with the new credit card act, will make it tougher for consumers to obtain credit. In addition to this, interest rates may rise, due to the increased risk associated with consumers inability to pay credit card bills. The credit card not only raise rates for people who are unemployed. They will raise the rates for everyone as well.
Does not seem quite fair. You can not find a job to pay all of your bills. Then some of your bills actually get worse, because you can not find a job. It’s kind of like the bank charging you money, for not having money.
As you can see, the rate of unemployment can actually have an effect on interest rates, nationwide. There are two things that need to happen, in order to remedy both unemployment and higher interest rates.
Jobs. Jobs. Jobs. As soon as the current administration is able to lower the unemployment rate (and get everyone back to work), the financial institutions will (hopefully) have greater faith in consumers ability to pay loans and the end result will be lower interest rates for all.
The other item that needs attention has really been addressed by the current credit card act. Consumers have long had many complaints about credit card companies and their practices and finally some action has been taken to protect consumers.
The credit card act has had an effect on loans for the unemployed. But in all reality, interest rates have reacted to the high rate of unemployment as well. Although the act has some overall benefit for consumers, the high rate of unemployment seems like it will be overshadowed by lenders who are less willing to provide credit. In additon to this, current borrowers may have higher interst rates to contend with.
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