Regulators May Ban Unsavory Credit Card Practices
Reuters reports that federal regulators are preparing to vote on regulations that will finally bring a little sanity to the credit card industry. The Federal Reserve, Office of Thrift Supervision and National Credit Union Administration are expected to vote Thursday to ban practices such as increasing a consumer’s interest rate at will, unless they fail to pay the bill within 30 days.
Double-cycle billing is also expecting to be eliminated. That’s the practice of reaching back into earlier billing cycles to help calculate interest charges in the current cycle — or, in layman’s terms, sticking consumers for interest on charges they already paid off. (When I interviewed Harvard Law Professor Elizabeth Warren a few weeks ago, she told me of a Congressional hearing in which one of the credit card company’s attorneys couldn’t explain double-cycle billing.)
The rules would also ban universal default — in which a credit card company raises your interest late because you were late with a bill to another creditor. That’s a practice that has been especially tough on families who are struggling to make ends meet. The changes are expected to apply to 16,000 companies, and could cost the industry $12 billion, according to the Wall Street Journal.
Related Posts
