Fed Could Remake Credit Card Regulations-New Rules Would Ban Retroactive Rate Hikes

[babylonsister]

Fed Could Remake Credit Card Regulations
New Rules Would Ban Retroactive Rate Hikes

By Nancy Trejos
Washington Post Staff Writer
Sunday, December 14, 2008; Page F01


The Federal Reserve on Thursday will vote on sweeping reform of the credit card industry that would ban practices such as retroactively increasing interest rates at will and charging late fees when consumers are not given a reasonable amount of time to make payments.

The Fed, which has been considering the proposed changes since May, declined this week to release details of the final draft regulations. But banking officials and consumer advocates said that they do not expect substantial changes before the vote, especially since members of Congress have pressured the Fed not to water down the rules.

However, industry officials and consumer advocates said, the Fed will likely postpone a decision on a proposal to prohibit banks from charging fees for overdraft protection unless they have given customers the chance to opt out. Both the banking industry and consumer advocates considered the overdraft proposal flawed.

If the new credit card regulations are approved largely as proposed, they would represent the most significant overhaul of the industry in decades, banking officials and consumer advocates said. The Fed has not yet indicated a timeline for implementation.

"It covers a lot of issues and is really unprecedented in its scope," said Edward L. Yingling, chief executive of the American Bankers Association. "You add them all up, it's going to mark the beginning of a new market."

more...

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/13/AR2008121300906.html?hpid=topnews

[Pharaoh]

1. How nice of the maggots!

Deciding not to kick us once we are on the ground. How compassionate of these Godly conservatives.

[babylonsister]

8. It does make you question the motives. Now they need everyone? nt

[DJ13]

2. Cowards should impose interest rate restrictions

[Donnachaidh]

3. they should be rolling BACK interest rates

and threatening RICO charges against ANY of them who try to impose double digit interest.

[jtrockville]

4. "Opt-out" clauses should be banned.

We should have to "opt-in" to increased rates and fees.

[Cleita]

5. I for one have been horrified at how they can change the contract with you that

you originally signed off on without your consent. One law I would really make is that once you make a contract for whatever interest rate and credit limit, that the card company cannot come along and say, "We've changed our terms...tough titty to you!"

[RB TexLa]

6. But the contract says the rate can be changed.

[Cleita]

7. No, I had a contract that never said that and yet my contract was changed.

I cancelled the card because I told them that they couldn't change the contract, but they told me that the company I had the contract with had sold out several times to the present company. I told them that it wasn't my problem so I would cancel the card. This company does not cancel my card and still sends me renewal cards although I haven't used the card in four years. I don't owe them anything and haven't for years, but someday I almost expect to start getting bills from them, although I have got to admit that it would be very ballsy, even for them. However, it's really egregious that they can get away with this and I have no recourse. Imagine if I had owed them money. I really monitor my present cards for any changes although I know that now they can do that loophole you mention.

[unblock]

9. just so we're clear on the present regulations for "retroactive", opt-out rate increases:

here's the current deal:

a credit card company can increase your interest rate and apply that new, higher rate to your existing balance only if:
(a) they notify you AND
(b) you "consent" by BOTH opting-out by canceling the card in writing and abstaining from putting new charges on the card.

in other words, the current logic is that they are cancelling your old deal but are offering to do a new deal with you at a higher interest rate and as a condition of doing more business with you, they are asking that you permit the new interest rate to apply to the old balance.

in theory, you are at liberty to say no and not do future business with them and thereby you can avoid the "retroactive" interest charge.


this would all be well and good if your options were a bit more clear and if canceling cards and applying for new credit elsewhere were always easy and didn't adversely affect your credit score.

[leftofthedial]

10. In a related story, Joe Biden is PISSED!