A couple months ago I wrote about how Congress has been considering the so-called "Credit Cardholder's Bill of Rights," which, among other things, would make it harder for credit card issuers to raise interest rates on cardholders for allegedly arbitrary reasons. This week, the Fed may by itself enact some regulations along similar lines. The Washington Post reported:
Among the many provisions is a ban on raising interest rates on existing balances unless the customer was 30 days or more late in paying the minimum. Other circumstances in which a rate change would be allowed would be if the card had a variable rate or a promotional rate that was set to expire. Banks would also not be able to treat a payment as late if the customer had not been given a fair amount of time to make that payment.
The proposal would also dictate how credit card companies should apply customers' payments that exceed the minimum required each month. When different annual percentage rates apply to different balances on the same card, banks would be prohibited from applying the entire amount to the balance with the lowest rate. Many card issuers do that so that debts with the highest interest rates linger the longest, thereby costing the consumer more.
The Fed will vote on these provisions on Thursday.
Barbara Ann of FL @ Jan 12, 2009 21:53:00 PM