Federal Reserve to Implement New Credit Card Rules
In a bid to protect consumers from fluctuations in credit card interest rates, the Federal Reserve has issued new credit card rules.
Beginning February 22, credit card companies can no longer increase their rates within the first year after the account is opened. These companies are then required to give credit card holders a 45-day notification if they are planning to increase their rates after the first year.
According to American Banker’s Association, these new rules are the most comprehensive ever implemented and can really help consumers to manage their credit card debt.
Under the new rules, credit card providers can only charge fees on the credit card holder for transactions that exceed his or her credit limit after obtaining the consumer’s consent. Another notable provision in the law is that the companies will be thwarted to issue credit cards to individuals under 21 unless they have the financial capability to repay their debts or a co-signer can make the required payments if the cardholder failed to do so.
Confusing billing processes and cut-off periods can be prevented as due dates will be the same month after month. Initial payments will be applied to balances with the highest interest rates, which will help cardholders pay their debts easier and at a cheaper cost.
Consumers will be glad to know that there will be no rate increases for their existing credit balance – except when they fail to meet their payment 60 days after the due date.
As these new rules are set to be implemented next month, some lenders are already pushing through rate increases this month, getting the ire of the Congress who passed the legislation and was signed by President Barack Obama in 2009. Other provisions of the law are said to be implemented later this year.
Writer: Rowell
