Many of us think nothing of the small plastic rectangle card we carry and
use on a daily basis. Credit cards and lines of credit have reached the
point of mundanity for most American consumers; they are simply a fact
of life. However, with so many consumers possessing credit across a multitude
of financial institutions, it should come as no surprise that monitoring
and collecting credit card debt is a huge enterprise. In an effort to
greater understand the inner workings of the credit card and debt collecting
industry, the Consumer Financial Protection Bureau ("CFPB")
bi-annual report on the conduct and trends of the creditors and third parties involved
in collecting debt. This post will serve to highlight some of the ways
in which debt collection behavior has changed and the ways in which these
changes reflect upon you as a consumer.
Struggling with credit card debt? Call our highly-rated lawyers!
Law Office of Simon Goldenberg PLLC
Or Call Today: (888) 301-0584
Sub-Prime & Secured Credit Cards
In its 2017 Report on the
Consumer Credit Card Market, the CFPB notes that the practices employed in issuing consumer credit
are in a constant state of fluctuation. The CFPB notes that while traditionally
lines of credit are primarily offered to those with “prime”
credit standings, creditors are beginning to market to those with “sub-prime”
credit scores on an increasing basis.
One of the fastest-growing trends in this respect is the issuing of
secured credit cards. Secured credit cards are those that are backed with a cash guarantee,
a guarantee that then becomes the credit limit on the card. These secured
accounts can serve as a low-risk way for those with lower credit scores
to improve their credit, especially in instances where they could otherwise
obtain a line of credit.
Improved offering of secured cards means that those with poor credit have
more opportunities to
improve their credit scores.
Credit Scores & Technology
The report also outlines several others ways in which the creditor card
industry is expanding its horizons. Allowing consumers free access to
credit scores has increased across almost all institutions. Over 200 million
accounts are now eligible to access their credit score, some can even
access without a prior relationship with a bank.
Additionally, the credit card industry has become increasingly digitized
in its approached to both marketing and customer service. The CFPB finds
that an increasing amount of credit accounts are being accessed through
an online portal, and that with this increase their comes an uptick in
the use of paperless billing and automated payments. The increased use
of online portals has also encouraged creditors to make more information
available to consumers, such as access to the aforementioned credit scores.
Short Term vs. Long Term Payment Plans
As the marketing of consumer credit continues to grow, so does the business
of collecting upon consumer debt. The CFPB report details that almost
all consumer credit institutions employ some sort of internal collection
effort, a practice which has seen a notable increase in the past few years.
While creditor issuers continued to employ the usual collection tactics,
the report showed an increase in long-term repayment programs and an almost
complete termination of short-term hardship programs.
The report details that, in general, third party debt collection shrunk
as an industry in the period between 2015-2017. Fewer creditors moved
accounts from internal collections to third parties, such as
debt collection agencies or law offices. The report also details that the past few years have seen
decrease in the selling of debt to other creditors. Additionally, while the process of pursuing litigation in order to collect
debt maintained a substantial practice,
some creditors reported that they were
no longer issuing lawsuits as a strategy at all.
Credit Cards Lawyers in NY & NJ
At the Law Office of Simon Goldenberg PLLC, we closely watch the changing
industry trends so that we can provide our client's with the cutting-edge
services they deserve. Our lawyers are dedicated to consumer protection
and help people understand their various options for debt relief, which
may includes debt settlement, bankruptcy, and defense from lawsuits. If
you're seeking help with debt relief or specifically a
lawyer for debt negotiations, contact us for a free phone evaluation and learn how we can help.
Call today to speak to a credit card debt relief lawyer -
Not legal advice, for informational purposes only. Not responsible for
typographical errors. Our law firm does not have any involvement or affiliation
to the report discussed in this article, nor are we affiliated with any
governmental or official agency. We are headquartered in Brooklyn, New
York City and we practice law only in New York and New Jersey. Contact
us to learn more.