New Credit Card Rules From The Federal Reserve
For the past year, our representatives in Congress have been working on legislation that will curb some of the worst abuses in the credit card industry and protect consumers from predatory practices a little bit more. These rules have been proposed before and some were even included in legislation that passed this past May, but Congress wants to enact these rules and add a few more to make sure that their constituents are being protected.
Curbing Unexpected Interest Rates
The new rules would protect consumers from unexpected and unwarranted rises in the interest rates charged to their credit accounts. The card issuer would be prohibited from increasing the base interest rate charged to the account for the first year after the account has been opened. They would also be prohibited from increasing the interest rate on an existing card balance, with new interest rate increases applying to only to new charges on the account.
Curbs On Over Limit Charges
The new rules would restrict the practice of enrolling all card holders into the credit card company’s “over-limit protection service” which enables the credit card company to pay for charges that go over the person’s credit limit and charge a hefty transaction fee for each charge they approve. Under the new rules, the consumer would have to approve each charge that would go over their credit limit and agree to the charge that will be levied against the account.
Curbs On Additional Fees
Many of the subprime credit cards that were issued in the past few years included significant fees that were charged to the credit card before the credit card was sent to the customer. The new rules would restrict the amount of fees a credit card company could charge to the credit cards of subprime borrowers.
New Age Restrictions
Because of the number of issues occurring with the credit accounts of those between the ages of 18 and 21, new rules would prohibit credit card issuers from opening a credit account for anyone under the age of 21 unless they meet specific criteria. The person that is applying for the credit account will have to supply supporting documentation that illustrates their ability to make the required payments for the credit card. If they are unable to provide this documentation, then they must have a parent or other co-signer on the account with them taking responsibility for the account.
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