The Consumer Protections Rules Limiting Credit Card Fees

A set of new rules puts forward federal reserve system on Wednesday,


which can prevent credit card vendor for charging consumers large penalty of fees because of their slight mistakes and can control the ability of credit card issuers charge a certain fees and higher interest rates. The issuers may also be required to re-evaluate the rate increases which are imposed since the beginning of the year before.

The new rules or changes will form part of the Card Act of Accountability, Responsibility and Disclosure and will be put into effect in February and come on top of consumer protection series.

There were some tactics that credit card companies have implemented for charging fees which even caused the most consumer scorn. For example, if the cardholders do not use their cards during a 12-month period, will be 'inactivity fee'. The inactivity fee is not a annual fees, which charged based on the frequency of use, while the annual fee often around $50 to $100 and are charged without considering how often the card is used. Another protection come from the new rules is that card companies can not charge a higher fee that than the amount of customer's transgression. For example, some card companies may charge $39 of late payment penalty, while the actual dollar amount of the transaction is only $20. So, according to the new rule, the issuers only charge a fee less than $20 and a single late payment or other account violation like going over the card's credit limit can only be charged penalty once.

Since Jan. 1, 2009, the card companies have been required to give reasons for any interest rate hikes. Though there is almost no indication to the card companies for how to determine the appropriate of increase charges, they still have to do so. And the credit card will become more transparent. However, even these rules are taken effect, banks will find new ways, for example in the form of new or increased fees to make up their lose and for the revenue.

How Much the Effect of Capping Credit Card Interest Rates?

A new law favored by two Democratic lawmakers yesterday. The law would set a new national cap on the interest rates for forbidding credit card companies from charging interest rates more than 16% , and to the cardholders who exceed a credit limit or make a late payment would be charged fees no more than $15.


College students who want to open credit card accounts also become much harder with the bill passed in May which banned certain fees. And, ahead of the implementation of the federal CARD Act, nearly all the major banks have concurred increased interest rates. It go against the consumer's interest with the increased interest rates by credit issuers. With this legislation, credit agencies have been restricted their greed for profits on all the American people, who paid for the mission.

It is no surprise that the bill met with vehement opposition from the financial services industry. Especially the representatives of South Dakota and Delaware, South Dakota is home to Citigroup’s credit-card division, while Delaware is home to the credit-card arms of Bank of America, HSBC, and JP Morgan Chase. Under the new bill, it become harder to get consumer credit, the economy of Delaware has taken a hit, employment rate of financial fell by 10 percentage points since 2007,while overall salary declined 25% accordingly. So, in order to attract credit card issuers to set up operations in the state, these two states repealed the terms of interest rates cap of the new law.

However, the effect is quite uncertain for the law to positive high or low credit card interest rates by capping credit card interest rates.