Protecting consumers from rate of interest hikes, heavy late fees and other penalties are the focus of new credit card rules approved by the Federal Reserve on June 22. Deceptive new fees and penalties have been enacted by credit card companies since the credit card law was passed in May of 2009. Aug. 22 is the start date of the Fed’s latest addition to credit card rules. Rules in the 2009 law already in effect are complemented and strengthened.
Resource for this article: New Federal Reserve credit card rules beef up consumer protection
Credit card late fees curtailed
The brand new credit card rules are the finishing touches of the Federal Reserve’s effort to carry out the credit card legislation President Obama signed last year. Reducing credit card penalty fees was one of the principal goals of credit card legislation, but Congress charged the Fed to figure out how. CNNMoney.com reports that consumers will most immediately notice the new penalty fee limit of $ 25. There are some exceptions. If the payment is late a second time in a six month period, the credit card business can charge a $ 35 late fee. Until Aug. 22, most credit card late fees are $ 39.
New limits on credit card penalty fees
New credit card rules also limit penalty fees for exceeding credit limits. Forbes reports that issuers can’t penalize consumers a lot more than either their minimum payment or the amount they exceed their credit limit. That means a credit card business can’t charge $ 39 anymore when a customer only exceeds the credit limit by $ 20. Going forward the penalty can’t exceed $ 20. But that consumer could still face a permanent penalty hike on his interest rate on future purchases. Credit card companies can also no longer charge an inactivity fee on cardholders who don’t use their cards.
Rate of interest increases under scrutiny
Credit card companies must review the high rate of interest hikes they imposed on customers starting from Jan. 2009 when credit markets crashed. The New York Times reports that credit card companies may have to lower interest rates if the reasons it raised them no longer apply following a re-evaluation.
Learn a lot more about new credit card rules
In a press release announcing the new credit card rules, the Fed said people can learn a lot more about changes to their credit card accounts by accessing a new online publication “What You Need to Know: New Credit Card Rules Effective Aug. 22”.
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