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Update New Credit Card Regulations Allow Room For Maneuvering
Blog Post Date: Mar 03 2010
UPDATE: New Credit Card Regulations Allow Room For Maneuvering
By Meena Thiruvengadam Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The credit card game rules have officially changed thanks to new credit card regulations, effective Monday, consumers now have the right to steadier interest rates, "reasonable" penalty fees, and clearer, more informative billing statements.
"Credit card customers will see a cessation to many abusive practices that have driven Americans into debt," said Sen. Chris Dodd, chairman of the Senate Banking Committee and chief author of the legislation supporting the new rules, with President Barack Obama and U.S. Treasury Secretary Timothy Geithner also commending the rules.
Geithner called them a "critical step forward" for the protection of the consumer while Obama said they tip the balance of power back to the consumer. "We are holding the credit card companies liable," Obama said in a statement.
The rules require credit card companies to give consumers forty-five days notice before increasing the interest rates or fees, to apply payments to higher interest balances first and to mail bills at least twenty-one days before payments are due. They also prohibit card companies from increasing rates on customers who pay unrelated bills late.
But the rules are not perfect.
"Large credit card companies are already coming up with new tricks and traps to juice as much money as possible from consumers," said Travis Plunkett, legislative director for the Consumer Federation of America. Some credit card issuers raised rates and fees in advance before the law takes effect to evade its protections, he said.
Plus, card companies still can charge for paper statements, raise minimum monthly payments, and charge whatever fees or interest rates they choose, the Center for Responsible Lending, a nonprofit organization aimed at eliminating financial abuses, said.
The loopholes are giving lawmakers, officials and others fodder for their continued push for the introduction of a Consumer Financial Protection Agency, or CFPA.
The CFPA has been envisioned as the government's primary means for consumer protection, but it stands in the way for financial sector regulatory reform plans taking shape on Capitol Hill.
Consumer groups are supporting Geithner on the issue. Plunkett said credit card consumers need a "cop on the beat" to help restrict abuses by credit card companies.
The Center for Responsible Lending said, "Until a strong regulatory regime is in place to restrict abusive practices, consumers will have a hard time tracking all the possible "gotcha" tactics issuers continue to use."
VIA WSJ
Keyword: Credit Cards
By Meena Thiruvengadam Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The credit card game rules have officially changed thanks to new credit card regulations, effective Monday, consumers now have the right to steadier interest rates, "reasonable" penalty fees, and clearer, more informative billing statements.
"Credit card customers will see a cessation to many abusive practices that have driven Americans into debt," said Sen. Chris Dodd, chairman of the Senate Banking Committee and chief author of the legislation supporting the new rules, with President Barack Obama and U.S. Treasury Secretary Timothy Geithner also commending the rules.
Geithner called them a "critical step forward" for the protection of the consumer while Obama said they tip the balance of power back to the consumer. "We are holding the credit card companies liable," Obama said in a statement.
The rules require credit card companies to give consumers forty-five days notice before increasing the interest rates or fees, to apply payments to higher interest balances first and to mail bills at least twenty-one days before payments are due. They also prohibit card companies from increasing rates on customers who pay unrelated bills late.
But the rules are not perfect.
"Large credit card companies are already coming up with new tricks and traps to juice as much money as possible from consumers," said Travis Plunkett, legislative director for the Consumer Federation of America. Some credit card issuers raised rates and fees in advance before the law takes effect to evade its protections, he said.
Plus, card companies still can charge for paper statements, raise minimum monthly payments, and charge whatever fees or interest rates they choose, the Center for Responsible Lending, a nonprofit organization aimed at eliminating financial abuses, said.
The loopholes are giving lawmakers, officials and others fodder for their continued push for the introduction of a Consumer Financial Protection Agency, or CFPA.
The CFPA has been envisioned as the government's primary means for consumer protection, but it stands in the way for financial sector regulatory reform plans taking shape on Capitol Hill.
Consumer groups are supporting Geithner on the issue. Plunkett said credit card consumers need a "cop on the beat" to help restrict abuses by credit card companies.
The Center for Responsible Lending said, "Until a strong regulatory regime is in place to restrict abusive practices, consumers will have a hard time tracking all the possible "gotcha" tactics issuers continue to use."
VIA WSJ
Keyword: Credit Cards
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