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As Americans continue to struggle with the consequences of skyrocketing credit card costs, Financial writer Jane Bryant Quinn promotes establishing an independent commission for monitoring the activities of credit card companies. Although recent legislation has implemented certain controls over credit card lenders, their ability to raise rates remains unchecked. Within days of the legislation being passed, consumers began receiving notifications of interest rate increases. Enough is enough.

Preventive Debt Management: Congress and White House on Board

Quinn notes that both Congress and the White House have expressed a need for creating an independent commission responsible for regulating the practices of credit card lenders. Other industries providing products and services are regulated by agencies including the Consumer Product Safety Commission, but the practices of consumer lending products including credit cards remain largely unregulated. The influence of consumer lenders in Washington has limited the ability of legislators to wield the level of control needed to protect consumers from unfair lending practices. An independent commission could implement changes including setting interest rate limits. and requiring full and clear disclosure of finance charges and how they’re calculated.

Credit Card Debt and Consumer Responsibility

Although government efforts to regulate the credit card industry may help consumers in avoiding unintentional credit card debt, it’s important for anyone using credit cards to understand how these products work and how they can lead to credit problems. Here are some tips for managing credit card debt before you get into trouble:

• Know your credit score: Visit the annual credit report website and order your free credit reports and credit scores. The credit scores must be purchased, but are helpful for determining how much credit cards may cost based on your credit score.
• Understand terms and finance charges before accepting a credit card: Accepting and using a credit card creates a contract between you and the credit card company; your use of the card indicates your acceptance of terms and conditions whether you understand them or not.
• Ask questions before opening an account: If you don’t understand the terms, call the company and ask questions. If they can’t or won’t assist you, don’t do business with them.
• Check with your bank or credit union: If you have checking or savings accounts, check with your financial institutions for credit card rates. Credit unions may offer members in good standing favorable credit card rates.

Impulsively opening credit card accounts can lead to trouble. Taking time to shop for the best terms and rates can help you maintain good credit and avoid surprises.

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If you’re serious about getting out of debt, you must put together a budget you can stick with. There are a variety of free online budgeting programs that can allow you to keep track of your income and expenses. Let’s take a look at how two of the more popular programs work and how they can help with paying off debt.

One of the most important steps you’ll need to take to put together an effective debt reduction plan is to track all of your expenses. This can be quite tedious if you try to keep track of your purchases by writing everything down or entering it manually into a spreadsheet. Online budgeting programs like Mint help you to quickly set up an account to track checking, savings, credit cards, loans, investments, and information about your home.  Security features include anonymous setup and the inability to use Mint to transfer money between accounts or pay bills.

Quicken Online is another free program that can help analyze your spending to set up a debt reduction plan. One way to knock down your debt is to get help with pinpointing the exact categories that are taking up most of your funds, such as housing, transportation, or food. You’ll be able to set up alerts for when you overspend your monthly allowance in any area.

Using online software means you won’t have to keep track of receipts and you can manage your account from mobile devices. This can be convenient if you’re trying to decide whether you can really afford dinner and a movie and want to see your checking account balance when you’re away from home.

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