New Rules Could Be Coming for Credit Cards

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Wed, Dec 17 - 1:44 pm EDT | 5 years ago by
Comments: 19
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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.

As Consumerism Commentary reports, the Federal Reserve is scheduled to vote on new credit card rules tomorrow, Dec. 18. Here are some of the new credit card regulations being considered:

  • 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?

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  • http://letsblogmoney.com Eric J. Nisall

    I’m sure that many people will welcome legislature aimed at helping people with credit card debt. The one thing that sticks out to me, and has always bothered me is how the companies apply payments. I believe that the payments should be applied to the balances in the order in which they were accumulated, regardless of the rate at which each charge was made. The earliest charges should be paid first, and any remaining money from the payment should be applied in chronological order until that particular payment is used up.

    Ordering the application of payments from highest rate to lowest does not necessarily benefit the consumer as a larger purchase at a lower rate carries more of an interest burden than a small purchase at a higher interest rate. Perhaps, all credit issuers should allow the consumer to choose which purchases a payment gets applied to to give consumers even more control.

  • miranda

    It would be nice to have better consumer control, but it will never happen. There’s just so much power the credit card companies will give up. But I think your point about interest rates on various charges is a good one.

  • http://letsblogmoney.com Eric J. Nisall

    Thanks Miranda. I know the credit card companies will not openly suggest it themselves, but I think that is the kind of protection the government needs to keep in mind if it is truly looking to help consumers. I’ve never been one to take issue with credit providers, as I believe that everyone makes their own decisions when using credit, but i this instance I actually think it would be better all around: the issuers would still be getting their interest, yet people would be able to put themselves in a better situation in which to use the credit in the future.

  • miranda

    For me the issue is that people get these credit cards under certain assumptions, and then, with no warning, the card companies change things — and there’s nothing that can be done. It’s very arbitrary, especially since even consumers who try to be informed find themselves at the whims of companies that don’t have to disclose some of the terms.

  • http://www.pongoresume.com/blogs/1/pongo.cfm Jennifer

    I hadn’t heard about Citi upping their interest rates until about 2 weeks ago when I opened my mail and my interest rate was increasing 5%. 5%!!! Unfortunately, I do carry a balance, so this is a big deal. I am opting out so that I can just pay it off under my current terms. I just couldn’t believe that they just got bailed out yet still did this to loyal customers. I have had the card for over 10 years, never paid late…unbelievable. Now, I have to take a hit on my credit for closing the card. I hope they lose tons of customers and I hope these new laws do get passed.

    I hope to not have to worry about credit cards in the future…but if I do, it would be nice to know that I was protected in some way.

    Thanks for the post!

  • miranda

    Thanks for stopping by, Jennifer! I agree that it’s pretty low of Citi — after everything — to jack up rates. Especially after promising Congress they wouldn’t do this last year. Of course, we’ve all seen how big business “regulates itself” in this whole mess. A little consumer protection would be nice.

  • http://freefrombroke.com FFB

    Getting rid of Universal Default is a biggie for me. I don’t think a card company should have the right to raise your rates because you weren’t diligent enough on a different card!

  • miranda

    I agree! Especially since in many cases a late payment may have got stuck in the mail, or you may have forgotten it. Two years ago, at the holiday season, I was so busy, etc., etc. that one of my loan payments slipped my mind. It arrived two days late — and all of my credit card interest rates went up.

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  • http://www.leadershipturn.com Miki

    Jennifer, When I close cards I ask for a letter that states that the account was closed at my request and it’s never affected my credit.

    Another thing you can do is role the CITI balance over to another card with a forever fixed rate. I’m getting a lot of offers. Or, if it’s not too large, you could role it over for 12 months at 0%, lots of those offers, too.

    I’ll be ecstatic if they really do get rid of the “lowest rate first” clause. That is the worst for me.

  • miranda

    That’s a great idea, Miki! I’ll keep the letter thing in mind. And, it looks like even more changes are likely next year when Congress cracks down as well.

  • http://www.BloggerNewbie.com Dee Langdon – BloggerNewbie

    About time to the existing balance and interest rate rule? Helllo! someone in the credit card industry has been sleeping with someone in congress for years and years. How can this even begin to make sense??

  • miranda

    This is very true, of course. Many of these businesses have been getting special treatment from Congress for years. So, even though I think that it’s great that some of these issues are being rectified, I do think it’s a little hypocritical for Congress to be upbraiding businesses for practices that the legislators have been allowing for years.

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  • Uncle B

    Don’t be fooled for one damned minute. The shysters and shylocks are still in control and will screw you right up the sore and over used brown spot every chance they get. Usury is a way of life for a large part of the American population, and without it we would be a strong nation. Credit cards should be abolished! Debit cards work well! If the truth was ever made clear to the goyem, the jig would be up! The American crooked banking system and the extremely expensive military/industrial complex enslave Americans and hold them to unfair contracts they have not even signed, but are assumed as law! The U.S.S.R. failed for the very same reasons America dies a little every day, and we will suffer the same “regime Death” as they did – just spend some time looking at the ruins of the Soviet Union, and ask why? Then look at America and ask When?
    This is a normal human cycle and the (GRD) great republican depression is the opening scene for America!

  • miranda

    You are right, Uncle B, that unless there is a fundamental change in the way we view money, and how we as a society interact with debt, things will eventually come to the point of complete collapse.

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