Credit card rules to back consumers
Credit card rules to back consumers
WASHINGTON (UPI) — New rules for U.S. credit card companies to be released soon are a step forward for consumers, who have lobbied hard for oversight, industry analysts say.
The U.S. Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration was to announce new guidelines Thursday, The Washington Post reported.
Proposals released in May, included prohibiting banks from raising interest rates until late payments were at least 30 days overdue and barring banks from slapping on late fees too quickly. Proposals also included applying payments to balances with higher rates of interest before others, the Post said.
“When companies sharply increase interest rates, that could have a devastating effect on the financial stability of credit card holders,” Travis Plunkett of the Consumer Federation of America told the Post.
The strategy has changed from educating consumers to dictating rules for the industry.
“Eighteen months ago the Fed was focused on disclosure and transparency, and now they’re coming out with a prescriptive, rules-based guidance. It’s a whole different world,” said Brian Gardner at investment bank Keefe, Bruyette & Woods.
