[Infowarrior] - Government Cracks Down on Unfair Credit Card Practices

[Richard Forno]

Government Cracks Down on Unfair Credit Card Practices

By Nancy Trejos and Binyamin Appelbaum
Washington Post Staff Writers
Thursday, December 18, 2008; 4:31 PM

The federal government today approved new rules that would ban certain  
financial institutions from engaging in unfair credit card practices.

The steps taken by the Federal Reserve, the Office of Thrift  
Supervision and the National Credit Union Administration represent the  
most significant reform of the credit card industry in decades. The  
government today banned banks, credit unions and savings associations  
from a number of practices. Among the practices that would be  
prohibited are: Raising interest rates on existing balances unless a  
payment was received more than 30 days late; charging a late fee if a  
borrower was given less than 21 days to pay; and applying payments in  
a way that would result in debts with higher interest rates getting  
repaid last. In the subprime credit card market, which caters to  
borrowers with poor or mediocre credit histories, fees that reduce the  
credit available to them would be restricted. Financial institutions  
would have to comply with the new regulations by July 1, 2010.

With the approval of new rules banning "unfair and deceptive"  
practices today, the federal government is handing a victory to  
consumer groups who have long complained of lax oversight of the $970  
billion industry.

Even with all its lobbying power, the credit card industry was not  
able to beat back the most sweeping overhaul in decades. Financial  
companies and trade groups argue that regulators are overreacting to  
problems in ways that will limit the availability of credit to  
customers.

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http://www.washingtonpost.com/wp-dyn/content/article/2008/12/18/AR2008121801883_pf.html