Highlights of New Credit Card Rules

Today is the day when federal agencies, including the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration, vote on credit card reforms that ban some credit card companies’ aggressive practices. Among the agencies, theĀ  Office of Thrift Supervision was the first to approve the final rules that prohibit savings associations from using practices that have long been considered as unfair to credit card users. The new rules, which won’t be effective until July 1, 2010, provide protections to consumers in the following areas (PDF file):

  • Interest rates changes: Credit card issuers will give its customers a 45-day advance notice before they change interest rates on accounts that have been open for a year;
  • Payment period: Credit card users will have at least 21 days to make payments without being considered as “late”;
  • Payment allocation: When an account carries multiple APRs, issuers can’t simply apply any payment to the lowest APR;
  • Double-cycle billing: Credit card issuers can’t impose financial charges based on balances from previous billing cycle;
  • High-fee subprime cards: Credit card issuers can only charge a maximum 25% of the credit limit as fees when the account is opened.

The changes are long overdue. At the same time, it’s unfortunate for consumers that the protection won’t come in one and a half years. Does it really have to take that long?

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