Sunday March 7 2010
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Our thanks to consumer advocate Clark Howard:
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Third wave of credit card reform rules coming in August
As you know, the credit card market is going through a dramatic change. This is one of those cases when the free market failed. The banks engaged in dishonest practices that led to a very politically popular interference in the free market.
As a result of the credit card reform law, there will be three phases of changes. The lion’s share of changes have already happened. The last phase will take place in August, and it tentatively looks like there will be more protections for customers.
Under the Federal Reserve’s proposed reform rules, banks will no longer be allowed to charge you $35 or $39 for that $2 coffee that took you over your limit. The issue of banks approving charges they shouldn’t just for an excuse to fee you to death has really been a lightning rod.
Going forward, the punishment has to fit the crime. So that $2 overage will have to come with something more like a $2 penalty fee. In addition, there will be no more stacking penalties one atop another.
The new proposed rules do have some “half loaf” provisions for consumers. For example, banks will be free to raise interest on future balances — provided they offer sufficient notice — on a whim; no valid reason will be necessary.
In addition, when you miss a bill and get hit with a higher penalty interest rate period, the bank is not required to take you back to your normal interest rate after you make a number of timely payments.
In related news, the Federal Reserve has been contacted to ask if Chase bank’s latest ploy is a violation of the credit card reform rules. The Fed’s reply? Deafening silence, so far.