Is There A Need For More Credit Card Debt Protection?
Over the past couple of years, more than six provinces across Canada have introduced new tough regulations with respect to the payday loan industry
. These regulations were in response to the years of demands by consumer protection forums and other organizations which were working to protect the interest of borrowers in the country. While the payday loan regulations were well received by the industry as well as the consumer protection forums, there is a growing demand to do more for the credit card debt situation as well in Canada.
It has been seen that credit card debts can go out of hand quite quickly if it is not taken care of initially. Credit card companies often entice people to use their cards more frequently in exchange of gifts, bonus points and other promotional methods. However, a lot of credit card users blindly use these cards and end up with a huge bill at the end of the month. There are several users who opt to pay only the minimum amount due not realizing that the rest of the amount immediately starts attracting a very high interest rate. The overall amount along with interest accumulated starts going up very fast month after month and many of the consumers dont realize this until it is almost too late and they are deep in debt.
Few people have started giving the example of payday loan regulations and have asked for tougher norms for the credit card industry as well. For example, in Manitoba, payday lenders are not allowed to lend more than thirty percent of the borrowers next paycheck. This has worked well as the amount borrowed by individuals is far more manageable and has a less potential of going out of hand anytime soon. Of course prolonged ignorance of the repayment terms can lead to a high interest but it is not the lenders fault anymore. Hence there is a growing feeling that credit card companies should also be as open as possible about their policies and ensure that they do not allow consumers to go overboard with their spending.
Of course many consumers who go overboard once in a while either due to ignorance or a genuine necessity, have used payday loans to pay off their current months credit card debts. It is a smart move as payday loans are due on the next paycheck and hence more manageable. Also by paying off the credit card debts for the month, individuals not only save themselves from high interest rates but also maintain a good credit score by repaying debt obligations on time.