The Federal Reserve Clarifies Rules to Project Credit Card Consumers
The Fed recently clarified its rules regarding credit card company promotional or “teaser” rates, requiring that card companies cannot increase a cardholder’s promotional interest rate unless and until the customer is at least 60 days delinquent on their payments.
These promo rates are used primarily as a marketing ploy to entice people to sign up for a credit card, and the deals offered can be really good for the consumer. But if the rate gets changed unexpectedly – before the promised expiration date – then the cardholder loses out on the benefit of the low intro rate.
Under the clarified rule, a card company that offers to waive interest charges for six months, for instance, would be prohibited from charging interest unless the account becomes more than 60 days delinquent. Similarly, if you sign up for a 2.99 percent rate for 12 months, for instance, your card company must honor that rate for the full time period – as long as you do not fall at least 60 days behind on a payment. The Fed also clarified rules to limit the fees that banks can charge customers for opening a credit card account. The reason for these clarifications is that after the passage of the CARD Act – a package of consumer protection laws passed by the Obama Administration – banks and their lawyers began to look for and exploit loopholes in the laws. But the Fed vows to stay one step ahead of them by closing any loopholes that are not fair to the consumer.
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Tags: Card Consumers, Consumers, Credit Card, Credit Card Consumers
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