The new credit card rules started working on 22nd August, 2010 under the Credit Card Act of 2009. The other major alterations were implemented in February and these last changes promised to confine the penalty fees on credit card.
But these new changes are not beneficial for everyone. Nessa Feddis, the vice president and senior counsel for regulatory compliance at the American Bankers Association said, “”These provisions for this August will primarily help those who find it challenging to manage their credit card, as these provisions really relate to late payments and interest rate increases, which are often based on a deterioration in their credit history.”
New Safe Protection Cap on Fees
According to the Credit Card Act the penalty fees should be “reasonable and proportional to the violation of the account terms.”
Nick Bourke, the director of the Safe Credit Cards Project for the Pew Health Group said, “The typical late fees and overdraft fee is $39. The Fed’s new rule will probably make most of those fees go down to about $25.”
The basic reason for this is the safe protection amounts by the CARD Act that include: a $25 penalty fee for the first time violation and a $35 fee incase of second violation and/or other violation of the same kind that may occur during the next six billing cycles.
Credit card issuer can charge more fee than that but for this they have to justify a higher fee through a cost analysis. Read the full story
