Debt Reduction Advice | Debt Reduction Advice

Consumers with bad credit reports may soon find themselves reliant on short-term lenders, as new laws being implemented on Monday by the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 may make it harder for them to open new lines of credit.

According to a recent report by Reuters, some of the rules being put into effect on February 22 – such as new restrictions on creditors’ abilities to charge fees on rates and existing balances and a card holder’s ability to reject rate changes – could cause card companies to tighten up their lending standards.

As a result consumers with good credit scores will get priority over those with poorer credit histories who may look like more of a financial risk.

With credit offers off the table, payday loans may become a more necessary financial device for those in need of immediate cash than they intend to pay back later

Payday loans have become known as something of a double-edged sword. While able to provide up to $500 in a loan that can be processed quickly without a drawn-out credit check, failure to repay them on time can result in hefty fines that drive one further into debt.

However, if without the ability to take out any new lines of credit due to a poor financial past, many consumers may choose the risk/reward of a payday loan over more drastic measures such as pawning off belongings or choosing to fall into debt.