Credit cards are a hot topic these days and, they have been since their creation. As with any hot topic, there are quite a few, BIG questions surrounding this topic. Questions like “Can I go to jail over credit card debt?”, “Can my lender increase my rate without notice?”, “Can my lender send my debts to collections without notice?” are being asked quite a bit lately. Here are the answers you’re looking for!
Can I Go To Jail Over Credit Card Debt?
No, you can’t go to jail for not paying back your credit card debts. You should know that not paying your debts won’t do anything good for you either. All that will do is lead to bad credit and possibly judgments against you! If you end up on the loosing end of a law suit, you may end up getting your wages garnished, a lean on your home and several other financially burdening side effects! However, if you are going through times of financial hardship, you can rest assured that you will not be arrested for a missed payment or two.
Can My Lender Increase My Interest Rates Without Notice?
No, that’s against the Card Holder Bill of Rights, an Act passed in 2009. This act now requires lenders to give consumers at least 45 days notice before increasing interest rates. It also requires the lender to give the consumer an option to opt out. There are however 2 instances where lenders are allowed to increase your interest rate at predetermined periods that you agree to when applying for credit cards. Here are the two exceptions agreed to in your application:
- Promotional Interest Rates – If you transfer a balance to a new credit card or earn a promotional interest rate in one way or another from your lender. These are short term interest rates. When you accept the terms of the promotion, you accept that the promotional period will expire and your interest rates will increase at that point.
- Default Interest Rates – If you go against the terms of the credit card that you have in any way, the lender is allowed to charge you a default interest rate. This interest rate is one that can take effect without notice. However, you are aware of what your default interest rate is when you apply for the card. This will be listed in the terms and conditions.
Can My Lender Send My Debt To Collections Without Notice?
Yes they can but, they wouldn’t want to. There is no act of government in place that requires lenders to notify anyone before sending a debt to a collections agent. But, they really wouldn’t want to. When a collections agency is involved, there is a cost that is involved as well! By sending your debt to collections your lender stands to loose hundreds or thousands of dollars. That’s just too much of a loss to take before asking the customer to pay by contacting them yourself a few times. Chances are, your lender will try to contact you for several months before sending your debts to collections. So many times that it may even get to be annoying!