Guarding 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. Since the 2009 credit card law was passed last May, credit card companies have tried to stay a step ahead of the law with creative new fees and penalties. The new credit card rules announced Tuesday by the Fed go into effect Aug. 22. Rules within the 2009 law already in effect are complemented and strengthened.
Credit card late fees cut
The Federal Reserve’s latest credit card rules complete its effort to implement the credit card law of 2009. A primary goal of credit card legislation was reducing penalty fees and Congress left it up to the Fed to say how. CNNMoney.com reports that numerous people will notice the new penalty fee limit of $ 25 right away. There are some exceptions. If the payment is late a second time in a six month period, the credit card company can charge a $ 35 late fee. Until Aug. 22, most credit card late fees are $ 39.
Credit card penalty fees limited
Penalty fees are also limited with the new credit card rules. Forbes reports the penalty fees can’t exceed the dollar amount of the consumer’s violation. For example, if a customer exceeds the credit limit by $ 20, a credit card company can’t charge them a $ 39 penalty. Going forward the penalty can’t exceed $ 20. However, a penalty in the form of a higher interest rate in the future could be an option. Charging an inactivity fee for customers who don’t use their cards is also prohibited.
Credit card interest rates under review
New credit card rules also require issuers to review high credit card interest rate hikes inflicted on consumers given that Jan. 2009 within the wake of a nationwide credit crunch. Upon re-evaluating why interest rates were raised, credit card companies may have to lower them if the situations for raising them no longer exist.
Need to know – new credit card rules
In a press release announcing the new credit card rules, the Fed said people can learn more about changes to their credit card accounts by accessing a new online publication “What You Have to Know: New Credit Card Rules Effective Aug. 22”.
More details on this topic
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www.federalreserve.gov
