More new credit card rules on the way

Posted on 09. Jul, 2010 by Collections Recon in Collection News, Press Releases

New rules from the Federal Reserve Bank that affect how credit card companies do business will become effective on Aug. 22, changing some of the credit card fees that banks can change individuals and businesses, as well as their ability to change annual percentage rates (APR).

Under the new rules, banks cannot charge credit card fees of more than $25 for late payments, unless the card holder has made a late payment over the last six payments or it can show the costs it incurred from the late payment justifies a higher fee. Under current rules, late payments can be up to $39, regardless of the amount of minimum payment.

The new rules from the Federal Reserve also prohibit banks from charging inactive fees for customers not using their credit cards. The rules will also prohibit banks from charging credit card holders more than one fee for an event or transaction

that violates the cardholder agreement.

After Aug. 22, banks will be required to inform credit card holders why their APR is being increased. If an increase is made, the company must re-evaluate that increase every six months, and if appropriate, must reduce the APR within 45 days after completing the evaluation.

In February, the Federal Reserve passed a first round of new rules for the credit card industry. Those rules require banks to give credit card holders 45 days notice before raising their interest rate, change fees or make other changes to the terms of the card. They also require banks to include how long it would take to pay off balances with monthly statements to credit card holders.

The February rules also prohibit banks from raising interest rates during the first year a card holder has a credit card. And when rates rise, the increased rates only apply to new purchases.

By Eric Decker
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Tags: APR, credit card, credit card fees, Federal Reserve Bank, rules