The Office of Thrift Supervision recently approved new rules, which apparently drew the highest number of comments ever received by the Federal Reserve – 65,000, aimed at the credit card industry.
Some of the new rules, which will take effect in July 2010, include, among others:
- allowing credit card companies to raise rates only on new credit cards and future purchases or advances, rather than on current balances;
- providing customers with 45 days notice – as opposed to the current 15 days notice - before changes can be made to the terms of the account;
- prohibiting unfair time constraints on payments;
- charging expensive fees for exceeding the card’s credit limit solely because of a hold placed on the account;
- requiring lenders to apply payments above the minimum amount to balances with the highest interest rate;
- making deceptive offers of credit.
Although the thrift agency believes that the new rules will go a long way towards establishing public confidence in the financial industry again, others believe that the new rules could make it more difficult for people with a poor credit history to obtain cards with higher interest rates. Still others envision that the new rules could cost the banking industry more than $10 billion a year in interest payments, a cost which may ultimately get passed on to those consumers who do pay their credit card bills on time.
For more information on this topic, please email Mary A. Zambreno.
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