Finally, there is good news to credit card holders. After months of speculation in the Congress, the new federal rule is now out in the open. The Federal Reserve of the United States has given a go-ahead to rules that will now safeguard the customers from unreasonable late fees being charged by the bank for delayed payments. This new rule also states a need to review the increase in the interest rates on the cards.
The new rule by the Federal Government clearly states that no credit card lender can charge in excess of $25 as late charges. This amount can increase only if the credit card holder has been repeatedly delaying payments month over month. This rule also prevents the banks and other financial institutions lending credit cards from charging inactivity fees, which are nothing but fees being charged on cards that customers hold but do not use. This rule also prevents the card lenders from charging multiple fees on just one delayed payment. Finally, the rule also states that all the lenders who have increased the rates of the credit cards as of June 1, 2010 to review the rates again and considering bringing them down.
Elizabeth Duke, the Governor of the Federal Reserve, in a statement mentioned that the new rules that are now levied on the banks will ensure that they relook at the late payment charges and other fees and reassess them so as to be fair to the consumers. She also went on to mention that the rule also mandates the banks to relook at the increased rate of interest and consider reducing them.
The credit card regulation was signed by President Barack Obama in May 2009. This will be implemented in three distinct stages. There are a few provisions of this legislation that are already in effect have given the card holders the right to negate the increase in the interest rate within forty five days and clear off the existing dues at the current rate of interest. Also, the provision details that the statement should be sent to the card holders not 14 days, but 21 days before the payment is due.
The rules approved this month will come into effect in the month of August. Kenneth Clayton, general counsel for credit cards and SVP at the American Bankers Association based in Washington said that these new rules will add more transparency and offer greater protection to the customers.