Happy Holidays from the Federal Reserve!
New regulations protect consumers from credit companies
Good news for credit card users (and who among us ISN’T one?): The Federal Reserve voted Thursday on a slew of new rules that will change credit policies in our favor, including preventing companies from raising interest rates on existing account balances.
Here are the highlights:
No more Universal Default. One of the nastiest tricks credit card companies pull is that they will raise your interest on an account – just because you have bad credit on another account, even something as simple as paying a bill late. At last, they won’t be able to pull this switcheroo – under the new rulings it’s completely illegal.
Easier on-time payments. All payments will be due at least 21 dates AFTER the bill is delivered – NOT after the statement is dated, as it stands now.
Fewer interest rate hikes. God bless us every one! For a while there it seemed like every time I got a statement they were raising my rate – even if I was being the Golden Child of credit card payments! Now, companies will no longer be allowed to raise rates on a pre-existing balance, and they have many fewer options for randomly raising rates on customers with good credit histories.
Payments now applied to highest interest items FIRST. Companies have always loved this trick. When you make a payment, the money goes towards the part of your balance with the lowest rate – which means the bigwigs still get to collect on the high interest portions of your account. Now, that’s been flipped, and they are required to help you pay down the high interest portions first.
The only drawback to all this? The regulations won’t go into effect until 2010 (although consumer groups are urging the companies to voluntarily comply much sooner – like now). Still, this is a holiday miracle I can really get behind!