From Sunday’s WaPo:
The Federal Reserve on Thursday will vote on sweeping reform of the credit card industry that would ban practices such as retroactively increasing interest rates at will and charging late fees when consumers are not given a reasonable amount of time to make payments.
….Among the many provisions is a ban on raising interest rates on existing balances unless the customer was 30 days or more late in paying the minimum….Banks would also not be able to treat a payment as late if the customer had not been given a fair amount of time to make that payment.
The proposal would also dictate how credit card companies should apply customers’ payments that exceed the minimum required each month. When different annual percentage rates apply to different balances on the same card, banks would be prohibited from applying the entire amount to the balance with the lowest rate. Many card issuers do that so that debts with the highest interest rates linger the longest, thereby costing the consumer more.
This is long overdue.
The card companies are lobbying this to death, but considering that Paulsen et al are considering bailing out this part of the industry,so preemptive regulation to get these companies to better manage their (soon to be taxpayers’) risk better seems right. The even better news is that apparently Chris Dodd is planning to reintroduce his credit card regulation bill from earlier this year in the 2009 session.