Wednesday, December 17, 2008

EconomicWatch: New Credit Card Rules May Bring Some Relief to Consumers

The Federal Reserve is expected to vote Thursday on credit card reforms that may relieve customers faced with late fees, universal defaults and shorter payment periods, Reuters reported.

The new rules, which were proposed earlier this year, are expected to prohibit credit card companies from increasing rates at will, with some exceptions, and to ban universal default, which permits changing card terms if the borrower defaults on another bill.

The rules are also expected to ban double-cycle billing, where card companies reach back to earlier billing cycles to help calculate interest charged in the current cycle.

Consumers will also likely see easier-to-read tables on monthly statements.

Credit card companies that initially resisted the changes, however, warn borrowing limits may be reduced and interest rates charged on credit cards will rise for borrowers.

The new rules need the approval of the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration, all are expected to act on Thursday.


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