March 2, 2009
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News: Fed's New Protective Credit Card Regs. Have Some Leaks.
Many of us are looking forward to the new credit card protections due out in July of 2010, but not all of us. Perhaps, it's just coincidence but, there has been a major upsurge in the last few months of attractive new business credit card offers. At the same time, not only are the numbers dwindling for new consumer credit card offers but, those same banks are closing unused consumer accounts left and right.
It is coming to light now, that these new business credit cards (commonly issued to single consumers who qualify) will be exempt from the protections covering consumer credit cards. When the new regs take affect next year, many of the consumer accounts of today will be replaced with business accounts.
These new "fair" regulations, mandated by the Federal Reserve in December will be nice. They will offer things like:
o Double-cycle credit card billing policies halted;
o Regulation of how often interest rates can be jacked;
o Regulation of justification for jacking rates;
o Setting a minimum standard grace period for payments before penalties can be imposed;
o Splitting payment allocations so additional payments are credited toward the highest APR.All these are very nice but, they won't apply to business credit cards. One other contention, yet to be resolved, concerns returning Military personnel. Currently protected, while away by the "Service Members' Civil Relief Act", they're APRs are limited to only 6%. When they return from duty abroad, however, that protection goes away. The Federal Reserve attorney is stumped on what to do about this and is taking the situation into further study.
The mainline regulations which don't cover these two ‘loopholes' draw their authority from the "Federal Trade Commission Act" which prohibits "unfair and deceptive trade practices." Meanwhile, until these two exceptions are resolved, it appears that the credit card industry plans to compensate for the loss of their former ‘unfair practices' by skirting those protections for these two groups.