Credit Cards
The credit card law that went into effect on July 1, 2010 made a lot of progress toward curbing some of the greedy practices engaged in by credit card companies. However, the industry had a lot of time to get ready for the changes and create new fees before the law went into effect. As a result, many consumers have been hit with rising interest rates, decreased credit limits, and changes in their due dates. The changes in the credit card law were approved by Federal Reserve regulators, representatives from the Office of Thrift Supervision, and the National Credit Union Administration. These organizations helped to ensure that the practices set forth in the new law are fair to the consumer, since many practices engaged in by credit card companies are clearly not fair.
The new rules for credit cards are intended to protect consumers from the practice of double-cycle billing and set limits for the raising of interest rates by credit card companies. The new law also sets a longer grace period for paying payments, extending it from 14 days to 21. Another change requires credit card companies to apply payments to debt with a higher interest rate first. However, the 2010 credit card rules do not apply to everyone equally.
Commercial Credit Card Holders
Business owners who use commercial credit cards do not receive any protection under the new credit card law. This is because they are not considered consumers. Business credit cards, whether for a small business or large, are not entitled to the same protections granted to consumer credit card holders. Some business owners fear that credit card companies may attempt to make up for the changes in consumer credit card rules by increasing the fees on business credit cards.
Those Returning from Military Service
During a February 2010 teleconference in which representatives from the National Credit Union Administration, the Federal Reserve, and the Office of Thrift Supervision answered questions about the 2010 credit card rules, someone asked a question regarding how the rules apply to returning military personnel. The “Service Members’ Civil Relief Act” requires credit card companies to reduce the interest rate on deployed military servicemen’s credit cards to 6% while they are away from home. This reduction is temporary and the rate returns to normal following the serviceman’s return from deployment. The questioner asked whether the rule restricting the amount that credit card companies are allowed to increase rates will prevent the companies from returning these reduced rates to the normal rate following deployment. This question stumped Benjamin Olson, attorney for the Federal Reserve, and is being reviewed.
