New Credit Card Rules

Your Money NowCCredit Card Reform—7/03/08

INTRO: Have you ever really read the contract that comes with your credit card? It's pretty unbelievable. The company can increase your interest rate if you pay the bill even one hour late, or if you go over the credit limit by mistake by even one dollar. And they can raise the interest on a pre-existing balance, not just new credit. These practices are unfair. And now the Federal Reserve Board, the Office of Thrift Supervision, and the National Credit Union Administration are proposing important rule changes to better protect consumers.

1. WHAT ARE THE PROPOSED RULE CHANGES?

A. For starters, issuers wouldn't be able to increase your interest rate on a pre-existing balance. If they're going to increase your rate, they'd have to tell you, in advance and in writing, and then it would apply only to new charges you make.

B. If you make anything more than the minimum payment, right now they can take that and they apply it to the part of your balance that has the LOWEST interest rate. This way, it takes you longer to pay off the high-interest amounts, and that costs you more money. These proposals would change that, making them apply your payment to the high-interest money first.

C. Credit card companies would have to give you a reasonable amount of time to make your payment. Right now, they can give you a very short time, and then charge you extra fees if you're late.

D. The new rules would also say that if they extend an offer of credit to you, in which you could get a low teaser rate or you could get a much higher rate, they'd have to explain what factors they'll look at to see if you can get that low rate or the higher one.

2. ARE THESE PROPOSED RULE CHANGES GOING TO HAPPEN?

A. The rules have been introduced, and comments have been requested. The credit card companies are likely to fight these changes. It's important that your voices are heard.

B. Citizens are being given a chance to weigh in at the federal level and tell these federal organizations if they agree with these changes.

C. What's especially valuable is for each of us who've experienced some of these unfair practices, to say so. Let the Federal Reserve Board know that they're on the right track, and that you think getting rid of these unfair practices is important.

3. HOW CAN WE WEIGH IN?

A. The Ohio Treasurer's Office have put together a comment area on our financial education Web site, www.YourMoneyNowOnline.org, to make it easy for you to weigh in, offer your comments and your story about these unfair credit card practices. Or you can call 614-466-2160.

B. You have until August 4th to leave your comments. We'll take care of forwarding all the comments we receive from Ohioans, to the federal officials.

C. Also, it may be interesting to read some of the comments already received by consumers about unfair credit card practices, and Treasurer Cordray's responses.

CLOSE: Go to YourMoneyNowOnline.org to talk about your experiences with unfair card practices. Your voices can make a difference.