Credit Cards: Federal Reserve Closer To New Limits

WASHINGTON — The Federal Reserve proposed rules Tuesday to better protect Americans from sudden hikes in interest rates on credit cards.

The proposal would generally bar rate increases during the first year after an account is opened.

It also would ban – with a few exceptions_ increasing the rate on existing credit card balances. For instance, if a customer is behind more than 60 days on a payment, the rate on the existing balance can be boosted.

"This proposal is another step forward in the Federal Reserve's efforts to ensure that consumers who rely on credit cards are treated fairly," said Fed member Elizabeth Duke, the point person on the effort.

The proposal also would require credit card companies to obtain a customer's consent before charging fees or transactions that exceed their credit limit, and would forbid companies from issuing credit cards to people under the age of 21 unless they have the ability to make the required payments or a parent or other co-signer.

The Fed is required to take the action under legislation passed by Congress and signed into law by President Barack Obama in May.

The public, industry and other interested parties will have an opportunity to weigh in on the Fed's proposal. The provisions are slated to take effect on Feb. 22, 2010.

Comments

[DarleenMB]

Time for everyone to cut up their cards and cancel their accounts. 35 years ago we all lived without them, I say time to do it again.

[jerrypl]

Being "closer" is no cigar!!!!

We the PEOPLE MUST take the matter into our own hands by teaching Wall Street and the financial banking crime syndicate a lesson by letting them know that WE, the average American, have more power than the rich elites they cater to.

See how: http://www.youtube.com/watch?v=QmFzeaqMu8U

http://eye-on-washington.blogspot.com

[jasev01]

Too bad they will hike all the rates by then to 29.99%

[dctackett]

many already have.

[RevSpaminator]

Federal credit unions won't. They are limited to 18%.

[StJames]

When are they going to get rid of double digit interest rates is what I would like to know? There is no reason for banks to be charging that much. Loan Sharks go to jail for this type of usury. The banks are using tax payer money for what 0.25% when they borrow from the Fed...I don't know but it seems to me that interest rates of 12.9%, up to 29.9% is one hell of a profit.

[lvdragonlady]

WHY does it take so long to put something like this in play? All it does is give the credit card companies time to raise rates as high as possible before the rules go into effect, which does NOT help the consumers.
if it passes, make it effective within 15 days, the companies would not have enough time to enact new rate hikes, then.

[thePOlitkalkos]

Where is the change, Obama? Where is the REFORM?

Job loss equates to home loss No jobs, no recovery. Why so many people out of work even with the stimulus spending? Why are more jobs still being shipped overseas? There is no such thing as a jobless recovery; that is n3ocon jargon.

good articles..­. http://www.iamned.com

meanwhile, the stock market is surging and everyone is too busy to counting their money to show any initiative.

[DianeTreehugger]

Too late for me. A few years ago I was a few days late (not even CLOSE to 30 days) on a card and then *poof* universal default kicked in and everything (except for a loan at a credit union) kicked into default rates of - thank you American Express -up to and over 30%. I was trying to get out of debt and suddenly found myself ska-rooed. I ended up going through a legitimate non-profit and got a repayment plan with rates that weren't in the loan shark range -- in exchange for closing the accounts, which I did happily. The only outlier who told the non-profit no thanks, we like changing over 30% - my good pals at American Express. When I closed those cards -- get this -- I got a call telling me that i risked putting my STATUS on the line by having it on my record that i at one time had a AmEx Card and then no longer did. And for those of you "tsk - tskers" who never carried a balance - good for you, and thank god you have never been in the position to need to pay for emergencies (dental, medical and veterinarian) and not have it tucked nicely away in the bank.

[PhilipTaylor]

WHY IS FED in charge of Credit Cards!

Where is the Financial Consumer Protection System we were PROMISED!

FED is owned by the Big Banks and can NOT be TRUSTED to Protect Consumers!

[Ping]

The FED doing what the Congress cannot do. And yesterdays vote confirms why Congress cannot take on corporations.

Leave the Fed Alone. Congress is the problem.

[dctackett]

Bingo!...

not many people realize that the FED is owned by several large banks, even foreign ones.

[Ping]

The President appoints the chairman. The banks fund the Fed. The people are supposed to own the Fed.

[themodernleader]

There are no rules on usury, that is, charging unreasonable, immoral interest. Without such a rule, regulation of credit cards will be ineffective.

[000Jade000]

MMMMMMmhmmm. And we have Dems to blame for that. They actually repealed the usury laws that we had in the late 80s.

[Rickfors]

And why weren't the Republicans doing anything about it themselves?


..........­..........­?

[GeoLee]

Well, with a republican president, why did not he veto such a bill if the republicans didn't like it? The dems did not have the vote to override any of Reagan or Bush 41's vetoes, so that dog of an excuse don't hunt.

[Nitehawk]

And as I recall that was because St Ronald of Raygun included it as part of his deregualtion package. You remember, the one that led to the Savings and Loans collapse.

[TheSecularist]

It was Reagan! He pushed for bank AND credit card industries deregulation. He implemented policies that made it attractive for manufacturing to go overseas; all in the name of globalization and his "supply side" voodoo economics theory. Reagan believed in laissez faire, the same BS Republicans are still pushing today. Apparently Reagan and his Republicans never read about the robber barons and the laissez faire policies that allowed them fester and grow at the expense of middle class Americans. You also have Reagan to thank for opening the door to religion in politics. Like GW, he used religious extremists to advance his political agenda. Thanks a lot, Reagan! You, too, Clinton. GW followed the Reagan playbook without any understanding or concern about the consequences.

[Artamentous]

How does increasing the interest rate on someone who is late make any sense?

"Oh you're having problems paying, let me increase your monthly payments then"

[dctackett]

It doesn't make sense... it makes money for those that have it, or can borrower it for nothing from taxpayers.­..

[uncomplicatedlife]

I remember (long time ago) If the issuer changed any part of credit agreement, the borrower had the option of doing nothing and accepting the change or notifying the bank otherwise. The account was then closed and paid off at the original terms. I've looked through my recent agreements and it's not mentioned. Bring back that rule, Feds!

[hellboundtrain]

Seems very odd being proposed by the fed, it seems.

[TJCole]

We needed to Nationalize the major corrupt banks and set new limits a year ago...or months ago, they are constricting the economy, as we enrich and reward them for their villainy and predatory irresponsible practices.­..

They are killing any new consumer spending 2/3rds or more of which is our economy...

Obama blew it listening to Rubin and, Geithner, Summers, Bernanke all those who did so much to create this mess..

As Einstein said: " The problems that exist in the world today, cannot be solved, by the same level of thinking that created them..!"

[khg1]

Too late for us. Even though we have always made more then the minimum payments all our cards are at 29.9 or 30 already. Can't they do something to force the LOAN SHARKS to reduce rate on those consumers who have always made on time over the minimum payments???