Government Regulation of Credit Cards

Since the federal regulators have put finishing touches on a few changes in credit card rules there has been a lot of speculation as to how it will affect the consumer. From discouraging uncertain interest rates to adding time to the due date, the regulations show the signs of having a promising positive effect on consumers.

Significance

On December 18, 2008, the most impressive credit card reformation took place in accordance with federal regulator's decisions. These regulations loosened up the tight reign the credit card companies had on consumers and gives consumers the leading role. The credit card companies have until July 1, 2010 to change over to the new regulations set forth.

A Limit On Interest Rate Increases

The new regulations allow credit card companies to raise interest rates under certain circumstances such as: once a promotional rate is over, if the consumer makes late payments or if the rate is variable from the start. The credit card company has to provide a 45-day notice to the customer before the rate increase can take place.

The End Of "Universal Default"

Credit card companies can no longer determine a customer's interest rate or raise a customer's interest rate based on his payment history with other credit issuers in a different business from themselves.

Added Time To Due Dates

Now there has to be sufficient amount of time given to the consumer in regards to their due date. Therefore, payments are now required to be due no earlier than 21 days after the credit card bill is mailed.

Detailed Due Dates And Timeframes

The days of early morning payment deadlines are over. The regulations proved that any payment deadline set before 5 pm is unlikely and a setup to charge late fees. Therefore all payments deadlines are now required to be set after 5 pm.

Pay Highest Interest Balances First

There are times when the consumer will have a card that has different interest rates for different types of purchases, for example balance transfers, cash advances and normal purchases. Paying the highest interest balance first means that any amount the consumer pays over the minimum balance should go towards the balance with the highest interest rate rather than the old way of paying the balance with the lowest interest rate.

A Limit On Over The Limit Fees

Such a fee is not allowed if the fee is caused by the consumer's credit card being over the limit due to holds or blocks on her account. If a consumer has a hold on her credit card due to renting a car or reserving a hotel room or anything in relation, it is prohibited for the credit card company to charge them an over the limit fee should their balance exceed their credit limit.