January 22,2009
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It's Just Not Fair!, Pt.1
– Is it just me?It's pretty certain that all of us feel that way at one time or another. The problem in the credit card arena is that, the problem is growing. More and more credit card consumers are stressing anxiety over being judged wrongly and injured by the consequences. But, the good news is that we may have some recourse. We have federal and state rules as well as many regulating agencies that provide guidelines and even statutes to protect credit card consumers.
The FDIC is one such agency and has recently compiled and disseminated its latest "Supervisory Insights" to the various credit card lending institutions. In it, they have defined three key elements which, together, constitute a judgment of unfairness. Fines can be levied against violators in ways that can be minor or extreme (anywhere from $11,000 to a million dollars per violation). Many governmental branches and agencies are also involved. Congress has decided to step up it's efforts and get things done more expeditiously and is poised to pass a bill called "The Credit Card holders Bill of Rights". Not only does this bill greatly accelerate the process (requirements would go into effect within 90 days of President Obama signing the bill vs. the existing regs, which don't until July of 2010), but it also takes a stronger stance on the issues. The issues of this bill are:
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Retroactive rate increases on existing balances will be banned, providing the credit card holders are in good standing. Those over 30 days late in payments, however, will still be subject.
- Instead of the currently unregulated 5 to 25-day notice, credit card lenders will be required to give 45 days' notice before rate increases on new charges may be levied.
- Banning "double-cycle billing": Some dirty credit card lenders like to ‘pull a fast one‘ by going back and averaging the previous billing cycle in with the current one for finance charges. Not only does this practice double-charge credit card consumers for some charges, but it also allows fees to be charged for balances that may have already been paid off. This nebulous practice will be stopped.
- A provision allowing credit card consumers to put a cap how much can be charged against their cards, in order to protect them from overdraft fees.
- The hated "universal default" practice will be banned. This is the practice of automatically hiking rates on a credit cards, based on unrelated financial activities. Being late on a medical bill and things like that, should not cause a rate hike on a credit card.
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