Tighter Credit Card Regulation, Expected

June 15, 2010 - The Federal Reserve has revealed that latest adjustment rise in accordance with the Credit Card Act of 2009. The new rules which will be in effect on August 2010 is seen to protect consumers from excessive hikes on rates and penalty fees.

Just until now, credit card companies would increase the rates without any notice or explanation. With the new rule, the companies have now the obligation to give their clients an explanation why the rates have increased and that there is a must for re-evaluation on the increase every six months. Also part of the new rule is for the companies to reduce the APR to a more appropriate one when the rates are found to be unreasonable within forty-five days.

This may seem to be very good for others but some find the new credit card rules to be disappointing due to some vague terms like re-evaluation and appropriate. The definition is not clear that no one knows whether there might be some legal definitions to them. This could give the credit card companies some ‘rights’ to look for any loophole that will provide them a way out of the regulations which had not been standardized.

Another area where the Fed gave an address was the rate of penalty fees charged on credit cards. Previously, the Center for Responsible Lending has issued a statement that inquired on the structure of the current and existing fees implemented. The Center for Responsible Lending conclude that these new credit card regulations were created to show an illusion of low nad proportional fees but at the same time has allowed the increase in hidden prices.

The new federal rule that will take effect on August 22, 2010 states that credit card companies can not charge anyone a fee which is not more than twenty-five dollars with the exception of the following instances:

• If one of your payments were late in posting then your fee can be as high up as $35
• If your credit card company can prove that your late payments have led them to incur greater losses, then you may be have to pay a higher fee

Then the Fed would go on saying that you cannot pay more on late payments than the overdue minimum payment neither in the over-the-limit fees higher that the amount that you already have gone over.

Every consumer is now just hoping hat the ne rule taking effect would decease the burden of credit cardholders.