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Feds to Crack Down on Credit Card Issuers - Issuers Retaliate

By John Rasor

Republish: EasyPublish™ Published: 28May2009 Word count: 461 Viewed: 223 time(s) Get Free Content For Your Site

Federal Regulators were generous with credit card issuers when they met last fall and enacted rule changes that favored consumers over the card issuers. They gave them time to implement the changes. In fact, they gave them until July 2010.

At the time, William Ruberry, speaking for the Office of Thrift Supervision, stated that the card issuers needed time to get their record keeping and computer systems in place to meet the new requirements.

What he and the other regulators must not have realized was how the card issuers would really use that time. And for many consumers, the news is not good.

For instance, under the new rules, card issuers will no longer be allowed to raise the interest rates on amounts you already owe unless your payment is 30 days late. And they won't be allowed to raise your rate on future use without giving you prior notice.

Thus, as long as you actually read your statements and any correspondence from your card issuers, you won't "accidentally" make a large purchase believing your interest rate to be 7.9% when in fact it is 17.9%.

At present, they can raise your rate on your entire balance - for no reason except that they choose to do so. And, they can raise your interest rate without notification.

They also won't be allowed to reduce your credit limits without prior notice. Right now, the only safe way to use your credit card is to go on line and check your available credit each time before you head to the store. Otherwise, you could find yourself subjected to hefty over-limit fees.

These are just two of the consumer-friendly changes, but they are the ones that are prompting the most frenzied action from card issuers right now.

In anticipation of the new regulations, card issuers are raising rates and lowering credit lines for thousands of consumers - even consumers who have a spotless payment record.

Why frenzied, when they have until July 2010? Because one U.S. Representative believes that since the Federal Reserve has labeled credit card practices unfair, deceptive, and anti-competitive, those practices should be halted now, not later.

On January 15, Representative Carolyn Maloney, D- N.Y. introduced a bill to the House called the Credit Cardholder's Bill of Rights Act. It contains basically the same regulations that the Fed handed down. She did this for two reasons. The first is that if passed, these important changes would go into effect within 90 days - not in July 2010.

Additionally, she said that while regulations are a good first step, they don't carry the weight and enforcement power of legislation passed through Congress.

Let's hope that in spite of the turmoil going on in Congress, both the House and the Senate take the time to consider and pass this bill.

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