Hate your credit card? Tell the Fed

The Federal Reserve Board and two other regulators recently surprised consumer advocates by proposing some decent rules that would reform credit card lending. Six AFFIL Partners issued a joint statement calling the proposal as “an important first step to stop credit card companies from pumping up their profits by using hidden traps and tricks that drive up the amount of debt consumers owe.” The groups explain: “the regulators would stop many unjustified interest rate hikes on existing balances, prohibit the charging of interest on debt already paid off and require issuers to allocate cardholder payments more fairly.” You can read their statement here, and the whole proposal here.

This is just the first step, and the final rule might—or might not—retain important protections for consumers. You can bet the banks are working hard to make sure it doesn’t. Amazingly, the Fed claims that a major reason the initial proposal contains some protections is because they received 2,000 individual comments from consumers last fall explaining how they had been ripped-off by credit card companies. Right now we’re in the midst of the 75-day official comment period about this proposal, so everyone should submit their story to the Fed, especially now that we know they take note of public comments.

It seems that pretty much everyone has been ripped off or irritated by their credit card company at some point, so there are plenty of stories out there. Has your credit card company ever suddenly decided to apply a new, higher interest rate to an old balance? Have they raised the rate on money you’ve already borrowed for no reason or for a flimsy reason? Have they sent you your bill so late that you barely had time to pay it without incurring one of those massive late fees? If you’ve ever found yourself in any of these scenarios, the Fed wants to know. Use the AFFIL website to send them an email. (The comments will be made public so be sure not to include your account numbers.)

The Fed’s proposal comes at a time when the House Financial Services Committee has been holding hearings on The Credit Card Holders Bill of Rights sponsored by Rep. Carolyn Maloney (D, NY). Advocates are clear that although the Fed’s proposal is stronger than expected, Congress still needs to provide additional consumer protections not proposed by the regulators. Despite this, some members of Congress are using the impending rule as reason not to legislate. We’ll keep you posted as it all unfolds.