Possible Reforms for Credit Card Industry
The Federal Reserve and Congress are both working on tightening the rules on credit card companies. Stricter regulation will probably be approved by the end of the year. Some of the rules being considered by the Federal Reserve include: (1) specifying when credit card companies can raise interest rates on existing balances, (2) prohibiting late fees when customers were not given a reasonable amount of time to pay their bills, (3) preventing credit card issuers from calculating interest based upon the average balance over 2 billing cycles. The proposals do not ban the universal default provisions now found in many credit card agreements. A universal default provision allows a credit card issuer to raise a customer’s interest rate if the customer is late on paying an unrelated debt. The Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration have joined together in trying to draft new rules for the credit card industry.
Filed under: Credit Cards