New Fed Clarification gives Delinquent Credit... - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » New Fed Clarification gives Delinquent Credit Cardholders a 60 days notice

New Fed Clarification gives Delinquent Credit Cardholders a 60 days notice

New Fed Clarification gives Delinquent Credit Cardholders a 60 days notice

It seems as if credit card issuers continue to look for loopholes to circumvent the Credit CARD Act of 2009. Not even two short years after the law originally passed, credit card companies are already taking the hit with a loss of revenues from the restrictions on when and if they can charge fees, increase interest rates and more. The latest issue to arise doesn’t have credit card issuers jumping through hoops, but it may provide an additional loophole for consumers. This time it is all about the promotional and introductory offers from credit card companies that seem to clog up your mailbox on a weekly basis.

Introductory Offers

More than likely, you have received one or more of these introductory credit offers at some point in your life. You may have even taken advantage of one or two of them. Introductory offers are those credit cards that say you can pay zero percent or a very low interest rate on credit card balance transfers and/or purchases for a set period of time. A good example can be the new introductory zero interest rate on balance transfer from Capital One® Platinum Prestige Credit Card. If you were to apply for this card today, you would have zero interest on your balance until June of 2012. Not only can an introductory rate help you save money on balance transfers, but now it may protect you from an interest rate increase too.

Late and Delinquent

When the new credit card laws went into effect, one of its policies became a regulation on when a credit card issuer can increase an interest rate. The law states that if a consumer is more than 60 days delinquent on the account, the credit card issuer has the right to raise the interest rate on the card. For new credit cardholders, however, the law protected them from rate increases for one year after establishing the card. For cards with introductory rates, the law states that the interest rate increase cannot occur until the introductory rate period expires. But, what if the consumer is delinquent on a credit card that is still in its introductory period? This question seemed to confuse both consumers and credit card issuers, but the confusion ended last week.

Interest Rate Increase

Now, the Federal Reserve has clarified when a credit card issuer has the right the raise an interest rate on a credit card account that has an introductory offer. As of March 18th, event if you’ve accepted a promotional credit card deal, a credit card issuer may still increase your interest if you become 60 days delinquent on your account.

Although, the passing of the CARD Act is supposed to protect consumers from interest rate increases and fee levies from the credit card issuer that are unexplained and unexpected, it is not construed to allow delinquencies. Since there seemed to be some confusion on how the new law applied to introductory offers where the account holders were delinquent, the Federal Reserve has now cleared that up with its latest clarification announcement on the interpretation of the law. That interpretation is simple – don’t be late on making your payments because at that point the law can not protect you and your rate will increase.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Travel and Dinning Out is Trending on Valentine’s Day

Posted: February 15, 2018

If you are planning to take your lover out for a night on the town or on a whirlwind trip for Valentine's Day, you are not alone. According to the new MasterCard Love Index findings, this type of emotion fueled spending is outpacing other ... Continue reading
Bass Pro Shops & Cabela’s Join the MasterCard Network

Posted: February 9, 2018

Bass Pro Shops and Cabela's have inked a deal with MasterCard bringing their combined consumer credit co-brand portfolio into the MasterCard network. Last year Bass Pro Shops acquired Cabela's, and at that time Bass Pro Shops had their ... Continue reading
The New Chase Starbucks Rewards Visa Card

Posted: February 8, 2018

Starbucks and Chase have joined forces to roll out the Starbucks Rewards Visa Card, letting cardholders earn rewards every time they buy a latte, a cappuccino or anything else at Starbucks - and they also earn rewards on all other ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
For Excellent, Good Credit
Our application is quick and easy with instant pre-qualification available
For Fair / Good Credit