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Credit Card Laws and Regulations

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As part of the effort to help consumers gouged by credit card companies, more changes to credit card rules were proposed by the Federal Reserve Board on September 29, 2009.  These proposed changes affect the so-called “Regulation Z” dealing with Truth-in-Lending aspects of credit cards.  They would help improve consumer protection from credit card companies by:

  • Generally prohibiting interest rate increases during the first year the account is opened
  • Generally prohibiting increases to interest rates that apply to existing credit card balances
  • Prohibiting the credit card companies from issuing credit cards to consumers younger than 21 years old, unless the consumer or co-signer (such as a parent) has the ability to make the required payments
  • Prohibiting credit card companies from charging over-limit fees unless the consumer consents to such a fee prior to the transaction
  • Prohibiting creditors from using “two-cycle” billing methods as a way of increasing interest charges
  • Prohibiting creditors from allocating payments in a way that maximizes interest charges
  • Limiting fees charged for subprime credit cards

These proposed changes continue to implement the Credit Card Act recently passed by Congress.  Please note that these are not final rules, but are the Federal Reserve’s proposals for implementation beginning February 22, 2010.  There will also be additional changes scheduled to go into effect on August 22, 2010.