Credit Card Settlement - New Norms on Anvil by RBI

There is finally a ray of hope for the countless and hapless credit card users who were so far being held to ransom by Credit card providing banks even on final settlement of dues by forwarding their names to Cibil, as still owing dues to the banks.

The Reserve Bank of India is very soon coming out with new guidelines which will disallow any bank to treat a customer as a Credit Card defaulter if they have negotiated the amount payable against his account and paid the amount to the banks providing such credit cards. Currently even after the customer has paid the negotiated amount as offered by the bank, their names continue to be forwarded to Cibil-Credit Information Bureau Of India Limited, the central repository of all consumers credit history across all banks formed in Jan 2001.

As a result of being treated as a defaulter the customer is not able to avail of any loans like personal loan, business loan, loan against property or home loan from any banks as the credit rating maintained by Cibil takes a free-fall downward. Being cornered and without any hopes of acquiring such loans from any banks the customer had to settle any dues as claimed and raised by the banks being the balance amount of the earlier settled amount plus penalties and interest due till date.

At present whenever dues are settled with a bank the balance is usually treated as amount written off. In many cases banks raise bills for very small amount balance including annual fees after settlement which should not have been charged at all in the first place.

Though the RBI is taking a very serious note of the matter and will declare fresh guidelines to address the current ailment in due course countless affected customers await with bated breath of the succor to be provided by the Apex Bank of India.

The author Subhrajeet Talukdar is the founder of Apex Finance & Marketing in Mumbai in April 2006 and the promoter of Eazeeloans.com a premier loan advisory portal.

Credit Card Debt Consolidation - Live A Debt Free Life

It is quite true that one can never enjoy life to the fullest without getting freedom from financial hassles. People, who are struggling to pay off their previous loans, do not like to apply for a loan due to the strict loan approval criteria of all banks and financial institutions. In fact, getting a loan in such situation will increase the financial burden of the borrower and he or she will definitely get depressed. When you are suffering from the problem of due debts, it is very essential to find out a suitable solution for their removal.

Efficient and professional help is what a borrower needs to settle his or debts at once. Since credit cards play a vital role in increasing the financial burden of the defaulter, settling credit card debts should be the first priority of the defaulter. At present, there are n numbers of financial institutions that offer credit card debt consolidation services, so that the defaulter may settle due credit card bills along with monstrous late fees and high interest rate. In fact, by settling credit card bills, the defaulter can feel quite relaxed, as credit card companies keep on increasing interest on their services.

Since consolidating credit card bills is the biggest necessity for a defaulter, credit card debt consolidation can prove to be very beneficial solution. It is quite true that keeping due debts can affect various social, legal and financial rights of a person therefore, it is must for a defaulter to pay off all due debts to avoid these restrictions. Basically, CCJs and IVAs can restrict the defaulters financial benefits for minimum six years but clearing all credit card bills can reduce that time period . However, bad credit can extend the disqualification period of a bad credit borrower but with credit card debt consolidation, every defaulter can get complete financial freedom.

While searching for credit card debt consolidation service provider, the borrower should not make any decision without proper market research. Since these service providers ask for your debt details, always evaluate all credit card bills before approaching any financial institution or bank. First of all, the borrower needs to gather all his or her credit card bills, so that the required loan amount can be evaluated. On the basis of this evaluation, he or she can apply for a debt consolidation loan. Since all debt consolidation service providers offer these services for people, who have due credit card debt up to £5000, the total debt of the borrower should be £5000 or more.

Getting credit card debt consolidation help is very simple, as most of these service providers offer their services through online mode. Online processing system not only makes this service fast but also allows the borrower to apply from the comfort of his or her home. For getting these services through online mode, you just need to fill an online application with a reliable service provider. Once professionals of these service provider firms complete the analysis and verification process, they consolidate all your debts into one monthly payment which will be definitely, lower than the sum of due credit card bills.

Defaulters of Loans Or Credit Cards From Banks, Beware of Cibil

Credit card and personal loan defaulters will find it more difficult to evade credit collection officers in future.

Banks can now track defaulters who have absconded or skipped payment through information currently being provided by Credit Information Bureau of India Ltd. (Cibil). Whenever a defaulting borrower applies for a fresh loan with any bank his credit history can be accessed by on e mail.

It was near impossible till very recent times to trace a customer in event of change of address unless communicated to the lending bank. Now due to the central database maintained by Cibil containing amongst others data about date of birth and PAN number etc they can be located and identified.

While there is a controversy about sharing such data & services to lending banks being an infringement on privacy the same seems to be well purview of the CIBIL act as confirmed by MD. Arun Thukral.

Surprisingly there have been cases in the past where two branches of the same bank have given loans to the same borrower due to unavailability of real time credit history of the customer. Sharing of database maintained by Cibil amongst lending banks will be a remedy to this unwanted problem.

Customers too would now be able to access their Cibil report by making online payment to Cibil who would mail the report to the address on its record. According to Mr. Thukral Cibil is also offering its analytical tools to banks to facilitate their decisions on credit worthiness of loan applicants by allotting credit score based on existing and past relationship across all products by participating banks.

The Reserve Bank of India had declared new guidelines which will disallow any bank to treat a customer as a defaulter if they have negotiated the amount payable against his account and paid the amount to the banks providing such credit cards or loans. Credit Information Bureau Of India Limited is the central repository of all consumers credit history across all banks formed in Jan. 2001.

Where Can I Get a Free Credit Score Report? Know Your Options

In these financially difficult times it is very important to know where you stand. Many people have lost their jobs, and many more are experiencing huge pay decreases. The people that have lost their jobs are finding it very hard to get new ones because of company downsizing. All of these things, along with the surmounting credit card debts that many people have taken on, are an equation for financial disaster. What's worse is that people are not able to pay bills and keep up with their loan payments, which can be a disaster for somebody who does not know how they are doing.

Many people do not know where they are financially, and that is a huge problem. These people will be surprised when they enter a bank to get a loan and they find out that they cannot have one because they have bad credit. This happens to many more people than it should, and if everybody knew where they were financially this problem could be easily avoided.

The easiest way to know where you stand is to get a credit report. This report has a complete list of all transactions that have been affecting your credit, and it also shows how good you are at paying people back for loans and bills. It also has a rating that many banks and other financial agencies look at to find out if you will be a risk to lend to.

Many people do not know where they can get these reports, and it is important to know your options. A credit report can not only help you to keep track of where you are, but it can also help you to see if you are becoming a victim of identity theft and stop it immediately. One place that you can get a free score once a year is from the government. By law, they have to provide you an updated report once a year per your request.

Another place to get these reports is from online sites. Many financial companies give out free reports to potential customers to try to get them to use their business for their financial needs. These reports are just as complete as the government reports, and many of these are also free. Getting a free report is very easy and only requires a computer with internet access. Knowing where you stand has never been easier than it is today.

Check a Credit Report Government Option - Any Governmental Alternative?

One of the benefits that came about due to the Fair Credit Reporting Act (FCRA) was the ability and right of all consumers to see their credit report once a year for free. All agencies that collect and sell certain information about consumers must allow this, and it cannot affect the score assigned to these consumers. This is as opposed to all other requests for information, each of which reduces a credit score by a small amount.

Today, the government has set up a website at which consumers can access this information from all three major bureaus simultaneously. This website, Annual Credit Report, is the authority that most people use when they wish to check up on their information. However, while it gives a decent amount of information, the government option is definitely not the best option. An excellent alternative, which gives far more information than the government options, is such sites as freecreditreport.com and creditreport.com.

These options are superior to using the government-sponsored website for a number of reasons. First, one can see his or her score in addition to the report itself. While there is cost involved, seeing the report alone does not tell somebody nearly enough to know what to expect when he or she takes out a loan. Unfortunately, the FCRA does not entitle a person to see his or her score for free, so a small fee is required. Most such sites charge between 5 and 25 dollars a month, and allow one to see his or her report once a month or more often.

Furthermore, these sites offer an excellent layer of protection from identity theft. Just seeing one's credit once a year is not enough. Identity theft can happen at any time, and one needs to stay on top of his or her accounts to ensure that it is not happening. The only way to do that is to see one's information. However, when the government passed FCRA, they were expecting people to use the free report to check for errors. It was never expected that identity theft would become a big enough concern that people would use the report to watch for that. Therefore, today one needs to pay. But the benefits fainted from a strong preventative measure against identity theft far outweigh the costs. It is worth it to sign up at the above sites just for that and many other benefits too.

Debt - Credit Cards New Rules

Acting off the public and congressional outrage over lending practices, the Federal Reserve created new rules Tuesday geared to protect credit card users from getting slammed by heavy late fees and other penalties.

Late fees have been capped by the Federal Reserve at $25. Some creditors were charging up to $40 for making a late payment. These fees sometimes increased balances and those close to their limit could easily be pushed over with available credit, then incurring an over limit fee of about $35.00. Now, multiple fees for a single late payment are considered a no go for creditors.

Penalty fees cannot exceed the dollar amount associated with the customer's violation. Meaning, the charge you incur for a single transaction should not exceed the dollar amount of said transaction.

Inactivity fees, recently introduced through a loop hole in the Credit Card Act, have also been banned. Creditors created this asinine condition for consumers who do not use the account to make new purchases on a regular basis.

New rules also require creditors to reconsider high interest rates inflicted on consumers since 09. A lot of creditors took advantage of the new laws in place and created new terms and coinciding fees to apply. These may be next on the chopping block.

While the Credit Card Act was set in place to protect consumers big banks found loopholes and still created new terms and conditions to counter balance the losses from new regulations. These new rules take effect on Aug. 22. So how long before big banks dig their holes through these new policies?

Fact remains at the end of the day the Federal Reserve and big banks still run this country. With secret societies and midnight meetings on mysterious islands, big banks are not going to lose their profiting place in the consumer market. These new rules come to comfort average Joe and ease him back into spending without worry of big banks bullying them with outlandish fees.

And some things never change...

Creditors can still charge whatever they want for interest. First Premier is offering their bad credit Visa at 79.9% APR. The same creditor that goes to 0% in a debt consolidation program. I have two myself enrolled...

Interest rates remain at a variable rather than a fixed rate. Billing cycles are still between 28-32 days and are scheduled in accordance with receiving the most fees from the variable rate applied.

Creditors are still lowering available credit limits without notice or reason which lowers your FICO score. This also causes the unknowing consumer to overspend, thinking they have more than they thought they did - and then incurring an over the limit fee.

Minimum monthly payments are still at such a low percentage of the debt that its only purpose and service to the consumer is the continued maintenance of their good credit standing via timely payments. Minimum monthly amounts are still designed to keep you in debt, not get out.

Minimum monthly payments are also immediately applied to the lowest interest rate between purchase, cash advances, and balance transfers. That means in order to pay down the higher interest rates on your account you'll need to pay more the minimum monthly to even begin putting a dent in it. The fact there are different rates for different transactions in itself is mud pie BS. You're given a line of credit - why does it matter how you use that line of credit? If I cash advance it or spend it all at BP on BS, what's it really matter? What justifies charging different rates for different types of transactions? Profit. Who lets this happen? We do by playing the game.

We're repeating a cycle. To end the recession.... To stop the bleeding... we need not open any new wounds of debt against the nation that adds to our deficit. A re-learning needs to take place on how we spend and manage money. It starts with you, then your neighbor- and so forth.

There are affordable and reasonable solutions out there to get out of debt and become debt free. Nonprofit Credit counseling organizations are designed to provide free budget counseling and develop a household budget that helps manage debt to income ratios positively on a monthly basis. A nonprofit debt consolidation program can consolidate your unsecured credit and medical debts to one low monthly payment that pays back the debt at reduced FIXED interest rates, enabling a consumer to be debt free within 5 years or less and saving thousands in interest.

To speak to a certified credit counselor for your free financial assessment call 800.905.1563 or visit our website freedomdm.org and LIVE CHAT with a certified credit counselor. You can also complete out contact request form and a certified credit counselor will call you at a time requested to review your information and see if debt consolidation can benefit you.

The Easiest Way to Eliminate Credit Card Debt

Credit card debt is a scary reality for millions of Americans and getting out from under it can be a daunting task, but there is help and you can find a way out. There are many options when it comes to working to eliminate credit card debt. You can use such tactics as debt negotiation, pay down plans, debt consolidation and credit counseling to get back on track. For the best results, a combination of these tactics will be used together.

Debt negotiation involves contacting your credit card companies and offering them a settlement price for a lump sum payment on the account. If you are talking with the right person, someone who has the authority to make offers on your account, then you can come to an agreement. If you have the lump sums available, pay them immediately. If you are negotiating toward a debt consolidation loan, let them know a potential payment date.

Pay down plans are a method of eliminating credit card debt where you avoid using outside help and loans and instead work a smart plan to pay off the debts. This starts with a listing of all your credit card accounts with the highest interest rate account at the top and down from there. You want to pay the largest amount you can to the account with the highest interest rate, while still paying the minimums on all other accounts to avoid default. When the first account is paid off, you simply move the large payment to the next account and continue on until everything is paid off.

If you need more help than that and don't have the lump sum amounts available to pay off your credit card debt, then you will likely need to turn to debt consolidation. Debt consolidation loans are offered to people who are trying to avoid bankruptcy, but still get rid of debt. You apply for and work out a loan that is used to pay off all the debts you are including and then you are left with only one loan and one monthly payment to worry about. This can also bring instant relief from harassing phone calls and letters as well as financially on your monthly budget with a lower payment than those you were paying combined.

You want to follow any debt management plan up with credit counseling to help build the tools you need to avoid getting into the same situation in the future. There are many companies offering this service and can bring you peace of mind about your future finances and the dreams you have surrounding them. You can find a way to eliminate credit card debt and do it in way that saves your credit.

What is Credit Card Universal Default?

One of the most controversial and polarizing features of many credit cards is what is known as universal default. Most people are aware that if they are late with payments, they may be charged what is called a default interest rate. What they may not know is that there may be universal default language in their user agreements. What this basically means is that if the user defaults on payments with any lender, their card company can still raise the interest rate to the default level. For the average consumer, such a practice seems predatory at best; however, since the mid-1990's universal default has become a fact of credit life. Knowing the implications of this fact becomes of paramount importance to the credit card user.

Regardless of whether or not one thinks universal default is right or wrong, it is important to understand what can happen if you default on a payment while carrying a balance on cards that enforce the universal default language of your agreement. Obviously, the best defense against any repercussions is to make all payments in a timely manner. Unfortunately, if through some misfortune that is not possible, the consequences can be severe, to say the least.

The first problem is that someone in dire financial straits may default on one payment. Suddenly, several balances will be subject to default rates, creating a cascade effect that will essentially make it impossible to catch up. Worst of all, even after someone turns the corner financially, the default rate applies until the balance is paid in full. Anyone making minimum payments knows how long that can take.

However, it is possible never to default on a payment and still run afoul of the rules. For example, suppose through some sort of fraud or institutional error a payment is not properly credited. Suddenly, every credit card you have starts charging the default rate. While it is possible to get the error corrected on your credit report, credit card issuers are under no obligation to normalize your interest rate.

So, while legislation has been repeatedly proposed to get rid of such perceived abuses as universal default, it still exists. The best way to deal with it is to see to it that your credit card issuers do not engage in the practice. As of now, only about half of them do; and in 2007, Citibank became the first lender to discontinue the practice voluntarily. So it seems that the day may not be too far off when universal default is a thing of the past. Until then, it is one more thing consumers need to keep in mind when choosing what credit cards to carry.

Credit Card Records Decline By Almost 50 Lac In A Year

Even as the economy is back on track and consumer confidence up, the number of credit cards in the system continues to dip. In the last one year, the total number of credit cards in use has dipped by almost 50 lakh.

According to the latest data released by RBI in its monthly bulletin, the number of credit cards dipped to just about 2 crore as of end February 2010 from around 2.5 crore a year ago. The data also indicates that average monthly card spends both in terms of value as well as volume have still not touched the pre-crisis (prior to Lehman collapse) levels.

Average monthly spend in FY10 has fallen to Rs 5,100 crore against Rs 5,400 crore in FY09. While average monthly volumes in the current year has been just 1.94 crore a month compared with 2.16 crore a month in FY09. Even peak festival spending through cards in the current fiscal is less than the previous years levels. ICICI Bank, the largest card issuer had around 8.5 million cards outstanding at its peak, which has now fallen to around 5 million. While for SBI credit card, the number has dipped from 3.5 million to 2.8 million.

The fall in cards is surprising as banks have started disbursing unsecured loans like personal loans, post crisis, in the past few months. Even credit cards outstandings are treated as unsecured lending by banks. Some large credit card issuers like ICICI Bank, SBI Card, Citi and even smaller issuers like ABN Amro and Barclays have either slowed down or cut their outstanding cards. Only few players like HDFC credit Card and Standard Chartered have seen a nominal growth in their numbers.

Pralay Mondal, country head (retail assets & credit cards), HDFC Bank, said: Lot of attritions are happening in the system as loss ratios had gone up. Banks are not adding as much new customers. As new customer acquisitions are lower than attritions, the overall numbers are falling. Previously, the number of new customers were higher. We are currently doing around 80,000-90,000 new credit cards a month and our losses are much lesser than industry. Currently, HDFC Bank has close to around 5 million credit card customers while StanChart has around 1.4 million customers.

Adds Shyam Srinivasan, Country Head Consumer Banking, Standard Chartered Bank: StanChart has kept its numbers flat for a while now. We have increased our share in the business. Some of them had overdone themselves and now they are letting go of customers. Its a normal process. As they were hit by high credit losses, they are trying to clean up.

According to Abizer Diwanji, executive director of Corporate Finance, KPMG India, Today, nobody is expanding on the card portfolio except in the debit card space. The cost of merchant acquisition is tremendously high. The maintenance of delivery of credit card is high compared to a personal loans. Its a far more cumbersome job.

One of the biggest problems facing the industry has been the rise in bad debts in the past few years. However, this seems to have stopped and bankers say there has been a drop in bad debts in the past few months. Sources said the overall credit card losses for the industry have now come down to 15-16% against around 18% earlier. However, even at these rates, most issuers are still making losses.