Taking Charge: New Credit Card Rules Help Out Americans
The federal government recently released new credit card rules that makes it harder for credit card companies to take advantage of American consumers. CNN reports that banks must comply with the credit card rules starting on Feb. 22, 2009.
Some of the new credit card rules that protect consumers are:
- Minimum interest rates will not be set by card issuers
- No automatic enrollment in over-the-limit programs
- Banks can no longer increase interest rates based on a consumer's paying or not paying other bills (no universal default)
- Consumers will get a 45 day notice on prime rate changes and existing balances generally may not be subject to the changed interest rate
- No over-the-limit fees from accidental processing on the issuer's part
The American Bankers Association now says consumers will benefit from the new rules. This is contrary to what the industry thought back when the legislation was passed in the Senate. As we wrote previously in Common Law, credit card companies asserted that the legislation may backfire, forcing banks to issue fewer credit cards at greater cost to the current cardholders and making credit harder to get at a time when many Americans need it.
However, we also wrote about how the very same companies tried to take advantage of consumers before the new credit card rules take effect by raising interest rates, imposing penalty fees, and having "hair trigger" penalty rates.
There are many who say that the new credit card rules actually help consumers. CNN quotes Nessa Feddis, vice president and senior counsel for the American Bankers Association as saying, "This demonstrates the Fed is trying to anticipate moves and err on the side of consumers."
- Fed Proposes New Credit Card Rules (Findlaw's Common Law)
- First Part of New Credit Card Laws Take Effect (Findlaw's Common Law)
- Credit Card Practices Bilk Cardholders Waiting for New Rules (Findlaw's Common Law)
- Banks take revenge for new consumer rules (LA Times)