Federal Reserve Board Proposes New Consumer Credit Card Rules
The Federal Reserve recently proposed a new set of rules that would limit credit card penalty fees and require card issuers to review recent increases in interest rates.
The proposed amendment to Regulation Z (the Truth in Lending Act), "would prevent credit card issuers from charging large penalty fees for small missteps by consumers and would require issuers to reevaluate the rate increases imposed since the beginning of last year," Federal Reserve Governor Elizabeth A. Duke said in a statement.
High fees, multiple penalties would be banned
The proposed amendment would also ban inactivity fees, which are charged when a consumer fails to use the credit card within a certain time period. It would also prohibit multiple penalty fees for a single violation of the credit card terms, such as an over-the-limit transaction or late payment.
More transparency, review of rates required
The provisions, which take effect Aug. 22, 2010, represent the third stage of the Federal Reserve's implementation of the Credit Card Accountability Responsibility and Disclosure Act of 2009, also known as the Credit Card Act.
March 26, 2010