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Fed Proposes Revisions to Credit Card Agreements
Posted on Jun 30, 2007 by Michelle Pastor
Consumers are often confused by the fees and terms of their credit card contracts, so the Feds are trying to help credit cards companies become more consumer friendly.
Currently, credit card companies have the right to change the terms such as the interest rate for their customers with 15 days’ notice. An exception is when the consumer was late on another credit card payment. In this case his interest rate could skyrocket without any warning at all.
With the proposed changes, the Fed wants consumers to get at least 45 days’ notice in the event that their interest rates or any other terms of their contract will change. That will give consumers time to explore their other options, such as transferring a balance to a new, lower interest credit card or paying off the balance if possible.
Filed under: Other News
Tags: creditcard, Fed
Comments
Kguy on Jul 1, 2007
The way they can change those rates is really terrible since most consumers have no idea that their credit card companies can do it. There needs to be a lot more done to help make sure consumers know whats going on with rate changes and hidden fees. Small businesses are also getting hit hard by these credit card company practices - I do some work with www.unfaircreditcardfees.com and they share how the interchange fees are hitting consumers and small businesses at the same time and they're only going up. At least consumers know about things like ATM fees, but like the changeable rates something needs to be done.
Tom Fragala on Jul 2, 2007
When a credit card company raises an interest rate after discovering a change to the credit score of a customer, that is called "universal default."
So if you may another bill late (say your mortgage or another credit card), this could effect your interest rate on this other credit card.
If you want to learn more about that, go here: http://www.bankrate.com/brm/news/credit-management/20040120a1.asp or do a Google search for the term universal default.
--Tom
Triston on Jul 2, 2007
These are great proposals. I'd also like to throw in one about interchange fees. Families pay about $300 per year in interchange yet most don't even know about it. Meanwhile, the credit card industry takes in over $30 billion a year in interchange alone.
Credit card companies like Visa and MasterCard need to disclose more of what they're doing. Speaking of disclosure, I do some consulting for the Merchants Payment Coalition.
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