Find the best credit card offers online.This Tuesday, the American Federal Reserve proposed rules that would protect American consumers from unexpected interest rate increases on their credit cards.
The news comes as credit card companies continue to raise interest rates and cut available credit in an effort to increase their profits and alleviate the effects of the economic and credit crisis. So far, credit card holders have been at the receiving end of many credit card policy changes which, though strengthening the position of credit card companies, have burdened card holders even more, considering the state of the economy.
The announcement of the Federal Reserve is a requirement for taking action due to the legislation that was passed in Congress and signed by President Barack Obama into law in May of this year. Dubbed the Credit CARD (Card Accountability, Responsibility and Disclosure) Act, the legislation brings many changes into the credit card industry designed to level the playing field between credit card companies and credit card holders. In signing the Credit CARD Act, President Obama described the provisions it provides as “common sense reforms” aimed to “protect consumers”.
Last Tuesday’s proposal is basically the forerunner for the final activation of the provisions which is scheduled to be on February 22, 2010. The new proposal introduces several changes to the credit card industry. The proposal will protect American credit card holders from sudden interest rate increases on their credit cards. In general, any rate increases are not allowed during the first year that the credit card is opened.
The proposal would also stop credit card companies from increasing the interest rates of existing balances on credit cards. There are some exceptions to the rule. Credit card companies can increase the interest rate of a card holder if he or she is unable to pay off his or her credit card balance for more than 60 days. However, if the card holder is later on able to repay the balances every month, he or she may be returned to the previous interest rate.
Other credit industry changes in the proposal include requiring credit card companies to get consent from card holders before charging over limit fees and prohibiting consumers less than 21 years of age from getting credit cards unless they can prove their ability to pay off their balances or they can get a parent or guardian as a cosigner.
Elizabeth Duke, the Federal Reserve’s point person of the Credit CARD Act implementation said, “This proposal is another step forward in the Federal Reserve’s effort to ensure that consumers who rely on credit cards are treated fairly”. Interested parties on the proposal can take part in the opportunity to weigh in on the proposals before its activation this coming February.
