New Federal regulations are designed to protect consumers…

After months of debate, credit card customers will finally get relief from the Fed with recently implemented regulations to protect consumers from unfair and deceptive industry practices. “The revised rules represent the most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts,” said Federal Reserve Chairman Ben S. Bernanke. “These protections will allow consumers to access credit on terms that are fair and more easily understood.” Financial institutions and credit card issuers have until July 1, 2010, to comply with the newly imposed federal credit card regulations.

The rules and restrictions address unfair credit card practices by:

• Forbidding issuers from increasing interest rates on a cardholder’s balance unless a payment is more than 30 days late.
• Banning issuers from charging late fees for payments made within three weeks or less.
• Restricting ‘feeder fees’ usually applied to subprime cardholders.
• Banning issuers from scheduling payments in a manner that slows payment plans for higher-interest credit card debts to maximize interest charges for credit companies.

The regulations are a win for consumer advocates, who have long complained that banks needed an overhaul of lending rules. Some industry experts predict that if the economic downturn continues, the Fed will likely impose additional rules for more financial institutions. The Consumer Federation of America, for example, supports more rule changes that include curbing aggressive card marketing to college-age consumers and further limitations on financial institutions’ ability to levy penalty fees and interest rate increases.

* To keep up with the latest changes, visit our Credit Card News Blog >

Bookmarks:

This entry was posted on Thursday, January 15th, 2009 and is filed under: Credit News. Follow through RSS 2.0 Responses are currently closed, but you can trackback from your own site.