Aside from spending its time making important decisions about our economy, the Federal Reserve stood up to credit card companies on Friday by proposing a set of rules that would be helpful to credit card-using consumers. If approved, the new rules would affect the following changes.
- Specify when card issuers can increase interest rates on existing balances.
- Ban finance charges on balances that have been repaid.
- Prohibit late fees on customers who were not given a reasonable amount of time to pay.
- Companies wouldn't be allowed to direct payments to pay down the portion of the bill that had lower interest charges.
- Give consumers the right to opt out of overdraft protection on their deposit accounts.
Ben Bernanke, the Federal Reserve's Chairman, said their previous efforts to require companies to improve their disclosure forms wasn't enough. He explained, "Based on our review of consumers' response to the Board's recent regulatory initiative, it seems clear that improved disclosures alone cannot solve all of the problems consumers face in trying to manage their credit card accounts."