18 Dec OTS Adopts New Credit Card Rules
The Office of Thrift Supervision announced that it has adopted new regulations for credit card accounts. These new rules will eliminate some of the worst of the practices routinely used by credit card companies.
The rule bans practices often cited as unfair to consumers, such as raising the interest rate on an existing credit card balance when the consumer is paying the credit card bill on time.
“I am extremely proud that OTS leadership has culminated in this important rule to ensure fair treatment for the millions of Americans who use credit cards,” said OTS Director John Reich. “The rule will enhance public confidence in financial institutions and establish a level playing field for institutions that want to do business fairly without suffering competitive disadvantages.”
The rule requires that consumers receive a reasonable amount of time to make their credit card payments, prohibits payment allocation methods that unfairly maximize interest charges and, in the subprime credit card market, limits fees that reduce the credit available to consumers.
The new rule will also give consumers a 45 day notice of changes the credit card companies propose to make to the terms of a credit card account, instead of the current requirement of a 15-day notice.
The full text of the rules is published by the OTS. The bad news: the rules don’t take effect until 2010. The OTS is, however, encouraging lenders to voluntarily comply with the rules prior to that time.
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