For What It's Worth
Finally, Some Guidelines to Live By?
By Anthony Catalano
Mon, 15 Dec 2008 17:24:14 GMT
New credit-card regulations may be on the way…and not a moment too soon for struggling U.S. consumers.
The Federal Reserve will meet Thursday to rubber-stamp the draft regulations it set forth back in May. So what's changing and what might the new rules mean for you? Here are the highlights:
1. Truly Fixed Interest Rates: If the Fed gets its way, banks will no longer be able to raise the interest rate for previous balances on a fixed-rate card "just because." Which raises the question, how were they able to get away with that practice in the first place?
2. Rational Allocation of Payments: The proposed regulations would force banks to allocate customers' payments across balances more equitably. Currently, most card issuers take your check and use the funds to pay down your lowest-rate balances (that sweet 0% promotional balance-transfer rate that you signed up for in the first place) while allowing your higher-rate balances (new purchases, cash advances) to grow unfettered.
3. Better Subprime Card Terms: The Fed proposal would cap upfront fees on subprime accounts at 50 percent of the total credit limit and allow account holders to pay off that initial balance over the first 12 months. A potential unintended consequence of this change, as reported by the Associated Press, is that companies serving this market are suggesting they would need to exit the business altogether if the new regulations are approved.
Will these new regulations offer you any real relief? Or are the Fed's moves simply too little, too late? Share your thoughts.
Message Edited by Anthony_Catalano on 12-15-2008 01:35 PM
The Federal Reserve will meet Thursday to rubber-stamp the draft regulations it set forth back in May. So what's changing and what might the new rules mean for you? Here are the highlights:
1. Truly Fixed Interest Rates: If the Fed gets its way, banks will no longer be able to raise the interest rate for previous balances on a fixed-rate card "just because." Which raises the question, how were they able to get away with that practice in the first place?
2. Rational Allocation of Payments: The proposed regulations would force banks to allocate customers' payments across balances more equitably. Currently, most card issuers take your check and use the funds to pay down your lowest-rate balances (that sweet 0% promotional balance-transfer rate that you signed up for in the first place) while allowing your higher-rate balances (new purchases, cash advances) to grow unfettered.
3. Better Subprime Card Terms: The Fed proposal would cap upfront fees on subprime accounts at 50 percent of the total credit limit and allow account holders to pay off that initial balance over the first 12 months. A potential unintended consequence of this change, as reported by the Associated Press, is that companies serving this market are suggesting they would need to exit the business altogether if the new regulations are approved.
Will these new regulations offer you any real relief? Or are the Fed's moves simply too little, too late? Share your thoughts.
Message Edited by Anthony_Catalano on 12-15-2008 01:35 PM
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it still does not address the already usurious rates that are inherent when you sign up for the credit card.If THEY were fixed at a reasobale rate it probobaly would negate the need for these new changes and save the consumer a helluva lot more.Mon, 15 Dec 2008 20:34:40 GMT | pokey
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I think it is terrible they can raise a person rates for so many reasons that the average consumer has no idea this can happen. It takes a lawyer to read there fine print. New regulations are long overdue the fox has been watching the hen house to long.Mon, 15 Dec 2008 21:53:27 GMT | wlpa
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If the Fed's really want to help the struggling consumer they should make the interest on all credit card loans deductible from your yearly income taxes, like the way it used to be ............remember those days??????????Tue, 16 Dec 2008 12:20:08 GMT | BIGBEAR
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I think that the government should step in on the credit card companies. The companies that are standing in line for our tax money are raising your rates to make up for it. So in a way your are paying the credit card companies to use your tax dollars. Rates have gone up so much in the last 3 months. I have heard of people who were at 7.99% are now at 26.99%. None of these people have done nothing wrong. Where is the justice in that? In my opinion credit cards are there to get people stuck in paying your minimum for life, and for some people that could be up to $200.00 a month. With the amount you owe only going down about $40.00 a month! So what do you think happens when everyone is stuck? For now I will only pay the minimum on any cards that I have. Like they are doing me any favors. Maybe the government should have gave everyone in the USA a check for $7,000 which is around what the bailout averages. Then people could pay there credit cards, house loans, buy things. That would have help us out alot more! The economy would have got alot better.Thu, 18 Dec 2008 01:26:24 GMT | Reddavey2008
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Well lets see; July 2010. U have to b kiddin', by then the bank fellows will have interest up to 50%, and then they'll say "gee, we have to follow these stupid rules. If r government realy cared about the workin' guy they would put the law into effect now. What another joke!Thu, 18 Dec 2008 18:03:43 GMT | wucampcop
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Exactly. I'm in trouble NOW. Was 10 days late on a Cap One bill due to ilness, and my rate jumped from 7.9% to 24%. No amount of begging pleading or negotiation would get them to ease up. My monthly payment is now so high, that it would take 100 years to pay off using minimum payments, which I'm actually not able to afford.Thu, 18 Dec 2008 18:41:05 GMT | ERICUEMS
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Why doesm't the Federal Government again allow taxpayers to deduct interest charges/finance charges when filing IRS? Wouldn't this also be a stimulus?Thu, 18 Dec 2008 21:24:16 GMT | sinned
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Read closely This doesnt even take effect for over 1 and 1/2 YEARS !! Just enough time for the Banks to finsh ripping off all they can ! Good laws, Spineless congress! What a Joke. Why dont the news groups Cover that outrage ???Message Edited by Bill2 on 12-18-2008 04:45 PM
Thu, 18 Dec 2008 21:42:55 GMT | Bill2
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Maybe not too little but absolutely too late. Why wait 1 1/2 years? The problem is now. Also, congress is up for a raise soon. Tell them they don't deserve it and better not take it!Thu, 18 Dec 2008 21:50:35 GMT | justjrw
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Public comments helped get the Office of Thrift Supervision to make these changes and maybe we can get them to shorten the implementation from 1.5 years to something reasonable like 30 days.Write to them at:
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
email: consumer.complaint@ots.treas.gov
Thu, 18 Dec 2008 22:33:37 GMT | Retired_Texan
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The joke is not funny. This is help for consumers? Seems to me it gives merely puts into writing the permission to keep gauging for a year and a half. The credit card industry needs heavy scrutiny right now. Why are $35 late fees allowed on a $5 balance? What's the interest rate there? What is the justification for 25+% interest rates? People need to stop living beyond their means and others need to quit making excuses to participate in unethical practices. If you have a job that requires you to enforce morally objectionable policies, don't be silent. Band together, get some power. Write your congress people. Send letters. Appeal for justice. Clarify the issues. Don't be part of the problem by taking advantage of others' weaknesses. It takes a lot of slippery people to run these companies. How valuable is a job that robs others of their means and you of your soul?Thu, 18 Dec 2008 23:28:13 GMT | freida
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The credit card companies are guilty of robbing their customers and otherwise using shady practices in business. However we have allowed this by using the product and sticking our heads in the sand. Just like gasoline; supply and demand allows the user to be abused. I say it is time to simplify our lives; cut up the cards, remove those features that we have come to be dependent on such as caller ID , call waiting etc on the phones, ten million television channels and all other fluff that they have convinced us we cant live without. If we fight back it has to be in THEIR pocket. Has anyone realized that our utilities are due every 22 days not every 30 days, hummm head scratching.Sat, 20 Dec 2008 15:00:58 GMT | Coty001
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After reading the notice I received for American Express over and over as to why they reduced my credit limit. FOR NO REASON. Well I would like to know of any one else that noticed that they list risky residential loan association. Well my home loan was purchased by Countrywide. Just because that name is on my credit report. I have been listed as risky. I do not have a sub prime mortgage, I have never make a late payment. Does any one know how to have these type of issues looked into. If it is a fact and I am not the only one I would like to SUE COUNTRYWIDE AND AMERICAN EXPRESS FOR MESSING WITH MY LIFE. It make a person want to just stop paying everything and recover with the rest of the people later on.Sat, 10 Jan 2009 18:40:46 GMT | a11hockey
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Guidelines to Live By?? How about not running your charge cards to the limit and then ranting about the credit card company wanting you to pay it back. How about not charging more each month than you CAN pay back. Did you think it was free money when you ran them to the limits? And if you're dumb enough to carry an American Express card, you deserve to get robbed. Any card that has a "membership fee" is not one to have, regardless of how prestigious they make it sound in their commercials. If you want to blame someone for your credit mess, look in the mirror.Mon, 19 Jan 2009 04:14:31 GMT | Fireguy
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Question? Who held the gun while all those visions of sugar plums were dancing in your head? The credit card companies? Please. Let's try putting the blame where it belongs for once and be adults. Return the snowmobile and take some responsibility. No one owes you a thing.Wed, 11 Feb 2009 02:06:02 GMT | jennyneptune
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Great grand-pa was right, put your money in a glass jar not a bank. Don't spend money you don't have. See what happens when you do this.....Thu, 19 Feb 2009 14:52:23 GMT | Scrudge
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What is NOT fair: the fact that credit card companies have the time (1 year) to do such things as raise our rates and we do not have any thing to stop them. My credit card went frow 8.99% to 16.99% witnin 3 months.I stopped that card and it ONLY went to 12.99%. Again, the mass of people paying for those who don't care, are inconsiderate - greedy!Tue, 10 Mar 2009 15:04:38 GMT | nusk1953
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I think all credit cards should have top interest rate of 10%, regardless of your limit, 29.99% is absolutely criminal and since we are only making a top 3% on savings accounts, these banks are still making 7% on interest, I wish I could get a 7% raise, I have not got a cost of living expense raise in years.These should also not be allowed to raise your rates or lower limits based on overall activity. I t should be judged on your particular record with that company, don't worry about your neighbor, mind your own business.
Tue, 21 Apr 2009 19:18:52 GMT | arlosmom
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yes they shouldnt be able to charge you a yearly fee for the use of the card then turn around charge the huge interest rates. then when your over the limit they charge a nice big fee. i got that was over by 30.00 got a charge of $39.00 and the interest added on went to $72.00 . But the payment was only $55.00 not even enough to cover the amount to lower the balance that i was allowed so got another charge for being over and interest. the only way to get below was send the over amount pluse 40-50 dollar plus cause the interest would put you back in same place. example1868.67 -100.00+32.56(interest)+39.00(over the limit)=1840.25 Payment due $55.00 Balance 1840.25-55.00=1785.25+32.00=1817.25+39.00(over the limit fee)=1856.25 so as yopu see will never get below the limit unless you send lots more. But all they want you to send is what they say and you never get below ypour limit. so they make money over money along with the hugh interest rate 23.15% and thats lowered from 28.75% that they lowered for me after complaining. I pay my account on time and more that is required and get penalized.
this move has to be addressed now rates At fixed and no over charges if paying all the interest and a yearly fee I pay is $59.00 just to be able to carry the card. Its Capital one.....
Thu, 23 Apr 2009 05:44:15 GMT | guy60451