May

12

Podcast: Fed Forestalls Congress with Credit Card Regs

May 12, 2008 |

I didn’t have time to get into the particulars of the Fed’s proposed credit card industry regulations in the podcast, so if you’re wondering what exactly they have in mind, they include:

  1. Banks would be prohibited from increasing the rate on a pre-existing credit card balance (except under limited circumstances) and must allow the consumer to pay off that balance over a reasonable period of time
  2. Banks would be prohibited from applying payments in excess of the minimum in a manner that maximizes interest charges
  3. Banks would be required to give consumers the full benefit of discounted promotional rates on credit cards by applying payments in excess of the minimum to any higher-rate balances first, and by providing a grace period for purchases where the consumer is otherwise eligible
  4. Banks would be prohibited from imposing interest charges using the “two-cycle” method, which computes interest on balances on days in billing cycles preceding the most recent billing cycle
  5. Banks would be required to provide consumers a reasonable amount of time to make payments

As Congressman Frank noted, a lot of what’s here is pretty much the same as what’s in the credit card industry reform bills floating around in Congress. But the legislation has more stuff in it and I have a hunch those Congressional Democrats may well want to push for the additional consumer protection measures.

Of course, they might just as easily wait until the next Administration for this one, if President Bush proves intractable.

Please to listen:

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For more information:

Federal Reserve Proposes Rules to Prohibit Unfair Practices Regarding Credit Cards
NASE Letter to Senate Finance Committee (PDF)
NASE Issue Brief on the Tax Gap
Quarterly Indicators: The Economy and Small Business, SBA Office of Advocacy (PDF)

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