debtconsolidationconnection.com
501 (c)(3) non-profit Organization
Free Consultation
While limits drop, consumers may consider debt management plan to reduce what they owe
By Oscar Monfort on Mar 24th, 2010
Though new regulations may come with the intent of helping consumers, some reactions to the law could hurt people's financial standing.
A recent report from Consumer Affairs noted that some credit card companies may be lowering their customers' credit limit amounts. They are doing so in response to the Credit Card Accountability, Responsibility and Disclosure Act.
"They are doing this to reduce the overall amount of credit they are extending, since they must maintain sufficient capital reserves," the report said. "At the same time, the credit card default rate remains high, so lenders are aggressively trying to limit their risk."
However, lowering a person's credit limit can also lead to their credit score dropping. This is especially true if the consumers has debts charged on the card, as the ratio of credit extended to the amount used is part of what determines a credit score.
As a result, consumers may wonder about ways to lower the amount they owe on their credit card. One option they may consider is a debt management plan, which may help people pay off debt more quickly.
More Debt Management News
