New Credit Card Regulations Are In
New Credit Card Regulations Are In
Credit card regulators and lawmakers recently approved a set of regulations that will protect credit card customers.
The news that the Federal Reserve Board approved credit card regulations came on Thursday December 18, 2008. This date is an important one for credit card customers around the world. However, the regulations won’t be put into effect until July 1, 2010.
There were three major boards that approved credit card restrictions. These were the Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration. In short, the new credit card regulations will place tight reins on banks and other credit card companies.
These credit card regulations are revolutionary. They will prohibit credit card companies and banks from certain practices. These practices include: applying interest payments in ways that maximize penalties for the consumer. Lenders will now be forced to be more “transparent about their billing practices.”
Ben Bernanke, the Federal Reserve Chairman, said, “These protections will allow consumers to access credit on terms that are fair and more easily understood.”
The regulations will also put an end to:
-Double-cycle billing-This method takes an average of the balance from the previous two bills. Because this method will no longer be used, consumers “who carry a balance will no longer get hit with retroactive interest on their previous month’s bill.”
-Interest rate increases-Credit card companies will no longer be able to raise interest rates on “pre-existing credit card balances unless a payment is over 30 days” past due.
-Reasonable amount of time-Consumers will now be given a reasonable amount of time to make payments. Payments will also be applied to higher-interest-rate balances first. This tactic will go a long way in reducing interest fees and penalties.
-New credit card statements-Consumers won’t have to decipher confusing credit card statements anymore. Each statement will clearly list when each payment is due, including the time of day. Statements will also highlight any changes to the accounts.
-An end to universal defaults-This out-dated policy let credit card lenders increase interest rates on one particular card if the consumer missed a payment on a completely different card.
Currently, Americans have about $976.3 billion in revolving credit. Additionally, 4.9 percent of all credit cards were delinquent at some point during the third quarter. These new credit card regulations will really go to work for the consumer. Although, we will have to wait awhile before the policies take effect.
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