New Credit Card Proposals on the Table
Even more proposals to help protect consumers…
Two new actions are in the works and are intended to further protect consumers from the big bad credit card companies. The first is an amendment to Regulation Z (Truth in Lending) proposed by the Federal Reserve Board that would ban several practices that continue to plague consumers and provide even more transparency in the disclosure of credit card account terms and conditions. Here are some of the things the proposed rule would do:
- Prohibit rate increases during the first year after an account is opened
- Prohibit increases on existing credit card balances
- Consent would be required before a lender charges a fee for exceeding the credit limit
- Limit the high fees associated with subprime credit cards
- Two-cycle billing methods would be prohibited
- Stop creditors from being able to apply payments to maximize interest charges.
The second legislative change has been proposed by Reps. Barney Frank and Carolyn Maloney. They’re requesting to move up the implementation date for the remainder of the Credit Card Act from February to December. The change would stop credit card companies and banks from raising interest rates and prohibit other controversial practices sooner.
Financial companies have taken advantage of a delayed implementation of credit card reforms by raising customers’ rates, Frank said. Several specific legislative actions went into effect in August, but the bulk of protections aren’t slated to go into effect until February 2010. “We’re not happy with the credit card companies who have been jacking up their rates and doing other things to their customers in advance of the effective date,” said Steve Adamske, communications director at the House Financial Services Committee.
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