The FED (Federal Reserve) just created new laws to regulate credit card companies from “unreasonable” late payment and penalty fees. The new rules also call for issuers to “reconsider” interest rate hikes imposed since 2009. Millions of Americans are dealing with thousands of dollars of consumer debt which is drowning them in fees and interest payments.
These new laws will assist to back-up other consumer debt rules that were signed into law by President obama as the “Credit Card Accountability Responsibility Disclosure Act” that will take effect August 22, 2010.
“The new rules require that late payment and other penalty fees be assessed in a way that is fairer and generally less costly for consumers,” states Federal Reserve Governor Elizabeth A. Duke. “Card issuers must also re-evaluate recent interest-rate increases and, if appropriate, reduce the rate.”
One of the main pillars of the latest rules is a top in most late payment fees. Currently many credit card companies are charging $39 or more in late fees; but the latest rules cap that fee at $25.
Another tenet is to stop credit card companies from charging a fee that is larger than the infraction (ie a $5 late payment can only be assessed a $5 fee).
Issuers are also now prohibited from charging multiple fees in response to a single late payment or other single violation of terms; and “inactivity” fees for the non-use of cards is now prohibited totally.
One of the ways debtors had been avoiding such fees is through instant approval credit cards which ordinarily do not have any fee structure .
While the changes have received some accolades , many more are stating that the new rules
don’t do enough to change the underlying problem; the huge amount of credit card debt that Americans are trying to get out from under.
Paul Hollender from Bloomfield-based firm Corash & Hollender states, ”It’s taking away some of the most outrageous things that credit-card issuers are doing, but I think it’s not enough to stem the tide of impending bankruptcies.”