The Federal Reserve last week approved proposed rules to end credit card issuers' ability to apply payments to the lowest interest balances first.
The proposed rules implement the law passed by Congress in May that overhauls credit card rules.
The rules would also ban interest rate increases during the first year after an account has been opened or on an existing balance. Also, they would ban the issuing of credit cards to minors without permission of a parent or guardian or demonstration of the ability to pay.
The rules would also ban double-cycle billing and limit fees associated with subprime credit cards.
While the rules require creditors to tell consumers what the total cost would be if they only made the minimum payment on their credit card bills each month, they don't contain a similar requirement for open-end lines of credit. In recent months, credit unions, banks and other financial institutions have fought for this because they say forcing the inclusion of additional data would be a regulatory burden and would provide consumers with too much information.
There is a 30-day comment period on the rules.
The proposed rules would implement the provisions of the credit card law that are scheduled to take effect on Feb. 22, 2010.
House Financial Services Committee Chairman Barney Frank (D-Mass.) and Joint Economic Committee Chairman Carolyn Maloney (D-N.Y.) have introduced legislation to push up the effective date to Dec. 1, 2009.
--cmarx@cutimes.com
The proposed rules implement the law passed by Congress in May that overhauls credit card rules.
The rules would also ban interest rate increases during the first year after an account has been opened or on an existing balance. Also, they would ban the issuing of credit cards to minors without permission of a parent or guardian or demonstration of the ability to pay.
The rules would also ban double-cycle billing and limit fees associated with subprime credit cards.
While the rules require creditors to tell consumers what the total cost would be if they only made the minimum payment on their credit card bills each month, they don't contain a similar requirement for open-end lines of credit. In recent months, credit unions, banks and other financial institutions have fought for this because they say forcing the inclusion of additional data would be a regulatory burden and would provide consumers with too much information.
There is a 30-day comment period on the rules.
The proposed rules would implement the provisions of the credit card law that are scheduled to take effect on Feb. 22, 2010.
House Financial Services Committee Chairman Barney Frank (D-Mass.) and Joint Economic Committee Chairman Carolyn Maloney (D-N.Y.) have introduced legislation to push up the effective date to Dec. 1, 2009.
--cmarx@cutimes.com
