Creditnet News Story
Fed introduces rules associated with credit card interest rates
Thursday, March 11, 2010
By Thomas Astery
As a result of the Credit CARD Act, lenders would have to re-evaluate changes in interest rates.
Accounts associated with credit card offers are going to face new rules, the creation of which were spurred by the Credit Card Accountability, Responsibility and Disclosure Act.
The Federal Reserve Board, as instructed by the Credit CARD act, proposed a new rule that amends the Truth in Lending Act. Through the rule change, card companies would have to change how they operate when it comes to interest rates and fees.
"The rule would prevent credit card issuers from charging large penalty fees for small missteps by consumers and would require issuers to re-evaluate rate increases imposed since the beginning of last year," Elizabeth Duke, governor of the Fed, said.
Fees associated with late payments would be limited by the amount due. For instance, if a consumer had a minimum payment of $25 and were late on making it, the lender could not charge more than that amount through a fee.
The rule change is associated with portions of the Credit CARD Act slated to take effect on August 22. Other regulations that take effect at that time include requiring some gift cards to last at least five years.
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