In an evolving society where social media and modern technologies has taken more space than regular communication channels, debt collectors have been facing some challenges when trying to reach lenders with what can be called as outdated standards.

A new rule now allows debt collectors to contact you on social media, email, text and of course phone. This rule was approved last year by Kathleen Kraninger, president of CFPB (Consumer Financial Protection Bureau)

When being reached by collectors, some criteria must be met:

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In a survey completed by Bankarete.com 42% of consumers in the US with credit card debt have increase their balances since Covid-19 arrived at north America in March 2020. 47% of those with increase said, this was caused by the pandemic.

These results bring to our mind a known and widespread problem, credit card debt is easy to grow and hard to reduce. And one of the main reasons of why getting out of credit debt is so hard is that the average annual percentage rate is more than 16%.

In the US the average person with credit card debts owes $5,525. And many of them can only afford to pay the minimum payments, resulting staying in debt for about 16 years and pay a high $6,000 in interest.

With a rough difficult future for that 42%, one of the possible solutions is to negotiate lower rates or to elaborate a plan to get debt free, usually Nonprofit credit counseling agencies can assist consumers at no cost. Borrowers can also consider consolidating their debts with a new loan, reducing expenses to battle debt, prioritize debts with the highest interest rates first, etc.

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Credit cards are the large lending product used by consumers, more than 175 million consumers have at least one credit card. The Consumer Financial Protection Bureau known as CFPB estimated that Americans paid $120 billion per year in credit card fees and interest. What give us $1,000 spent per every American household per year.

But being the most consolidated financial product for consumer, do not necessary indicates they are the best option financially.  Credit card rates and interest usually are relatively expensive for consumers. Indeed, interest rate on credit cards increased by more than 20% (from 2015 to 2019).

This has brought CFPB to the mission to search for a fairer competition in the credit card market that can be reduced to 3 main topics:

• Uncover anticompetitive practices. In an industry with a small number of major players, anticompetitive practices can be common. CFPB uncovered that over the course of 2014, the biggest players in credit card industry withhold information previously reported to credit bureaus about borrower repayment making it more difficult for other issuers to offer competitive pricing to customers.
  
• Offer an easy way for consumer to compare fares and refinance your credit card. To get a specific rate from a credit card, consumers often must apply for those credit card. Multiple applications could be necessary to check rates and this can lead to a negative impact on consumer credit score, taking away consumer right to shop for the lowest rate. The CFPB is looking to give consumers more control of their financial data, escaping from high rates and lousy service and allowing them to create more options for themselves to find better deals.
  
• Scrutinize junk fees. Many of the worst practices of the credit card industry were eliminated thanks to the CARD Act of 2009, but industry is still hugely dependable of fees. Given the millionaire amounts collected on fess for many transactions, competition may be ineffective when putting down prices. CFBP will consider ways that help consumers to reduce fees and give them a more affordable cost of credit.

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With government decision of resuming loan payments there are certain aspect you should take in consideration:

Step 1: Make sure you have updated any change on your contact information or check if it is accurate.
To make sure you get billing statements or other type of notification before your payment due date, check or update your contact information on your StudentAid.gov profile.

Step 2: Evaluate your options depending of your credit type if you can’t afford payments.
Depending on the type of loan you have you could have different options if you can’t afford payments. Your options will depend on whether the loan is federal or private:

• Federal loans:
  • • Check out for repayment plans
    • Look for a temporary authorized pause
• Private loans:
  • • Ask us for forbearance options

Step 3: Watch out for scams
Scammers could try to take advantage of circumstances related to the pandemic and government relief packages. If you are looking for help, look only for certified agencies or counsellors. Scammers may claim you are eligible for loan forgiveness. Please remind these types of offers are in 99% chances a big scam.

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