Yesterday, the Federal Reserve enacted a large rate cut. And while that may help those with credit card debt pay things off a little more easily, there is a lot more that could be done to protect consumers. And the Fed may do it.
- Interest rates. This is a biggie — a real sore spot with me. Anyway, with the new regulations, interest rates would be less random, especially for those in good standing with good credit (something that irks me about Citi). Also, rates could not be raised on an existing balance.
- Universal default. Credit card companies can no longer penalize you for having a problem with a different credit account.
- Later credit card payment due date. Now, you will get 21 days instead of 14 from the credit card statement date to make your payment. This will reduce your chances of late payments, and hopefully help your credit score.
- Payments applied to higher interest first. Right now, most credit card companies apply your payments to the low interest items first (a special rate on a balance transfer, for example). Now, though, they will have to be applied to the higher interest items on your credit card bill.
In this economy, with a recession coming on, any help you can get in terms of paying down debt — and possibly having lower payments (thanks to lower and less capricious rates) — can be a real help.
Two-cycle billing is also being considered. I know that many consumers choose to use credit cards, but many practices are obscured and downright unfair. The consumer does deserve some level of protection from those who prey upon them.
Listen to more about the possible new rules for credit cards on NPR.
Also, see more on legislation affecting your personal finances at Get Rich Slowly.
What do you think about the new credit card rules?