We can certainly live without credit cards, but for a very long time we were fooled into thinking that wasn't the case. Credit card companies were able to get away with a lot during that time and weren't always regulated in ways that would protect consumers. Yesterday, the Fed ruled on a set of new regulations that are obviously consumer-oriented, but credit card companies won't have to act accordingly until 2010. According to the AP, carriers will be prohibited from the following under the new rules.
- Placing unfair time constraints on payments. A payment could not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay.
- Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account.
- Unfairly computing balances in a computing tactic known as double-cycle billing.
- Unfairly adding security deposits and fees for issuing credit or making it available.
- Making deceptive offers of credit.
To see what else credit card companies will be accountable for under the new rules,
- Credit card lenders will be required to apply any payment above the minimum to the part of the balance with the highest interest rate.
- The so-called subprime cards for people with low credit scores typically have no more than a $500 credit limit but require a large upfront fee.
- The rules cap that fee at 50 percent of the credit limit and allow the cardholder to pay off the initial balance over a year, not immediately.