Federal Agencies Crackdown on Unfair Credit Card Practices

Fair PracticesFinally credit card regulators have moved to make it easy for consumers to pay their bills by giving them enough time. The planned tighter rules will help prevent credit card companies from unfairly raising interest rates and charging increasingly aggressive penalty fees.

Among all the proposed changes, we really liked the one which aims at fair allocation among balances with different interest rates. Now it would be required that payments above the minimum be applied in a way that was "beneficial" for the cardholder. For example, a payment above the minimum would go toward a large balance at an 15% APR rather than a small 0% balance transfer. This would provide a breather for all cardholders carrying balances with varied APRs.

It was shocking to discover that credit card lenders collected more than $18 billion (according to data collected by consulting firm R.K. Hammer) in penalty fees last year. The new regulations now face a 75-day public comment period and could be completed by the end of the year. Similar steps have been proposed in both houses of Congress.

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