The Federal Reserve Board has published the latest card regulations that it was mandated to develop by the Credit Card Accountability Responsibility and Disclosure Act of 2009. The rules announced today will go in effect on Aug. 22. Most of them address practices not common to credit unions.
According to the new rules, credit card issuers would not be able to charge a penalty fee of more than $25 for paying late or otherwise violating the account's terms unless the consumer has engaged in repeated violations or the issuer can show that a higher fee represents a reasonable proportion of the costs its incurs as a result of violations.
The new rules also prohibit credit card issuers from charging penalty fees that exceed the dollar amount associated with the consumer's violation, thus card issuers will no longer be permitted to charge a $39 fee when a consumer is late making a $20 minimum payment.
Under the new rules, card issuers will not be able to charge "inactivity" fees on dormant accounts nor charge multiple penalty fees for one late payment.