The new set of regulations has devastated many people. Many consumers have complained that their credit rates increased with no reason at all and the credit card companies do not inform them the reason why. Others point out that the new rules have loopholes in it and don't really protect customers; rather it increases the chances for credit card issuers to obtain profits.
The Federal Reserve has just taken in the role of a consumer watchdog. The House Democrats has recently agreed to give the Fed the duty to supervise credit cards, mortgages, and other consumer financial products.
The new credit card regulation was supposed to protect the credit customers from unfair interest rates and disallow excessive fees charged to customers. Specifically, credit companies may now increase their interest rates only when circumstances dictate them to do so. The act, however, is only applicable to consumer credit cards and does not apply to business or corporate credit cards.
In a report from BusinessWeek, Federal Reserve has stated that there is no need for a new regulation for business credit cards. The Feds further added that credit card issuers may depend mostly on their ability to adjust future rates when lending credit to small business enterprises. This allows issuers to take advantage of their experience about the businesses' ability to pay. The Fed states that if the banks and credit card companies are restricted from adjusting the interest rates, the initial interest rates may tend to become higher affecting small business credit cards negatively.
The new laws also protect credit customers who are often late in their bill payments to pay excessive penalties and fees. These policies are no longer allowed. Credit card companies are prevented from charging penalties of more than $25 unless the customer has made repeated violations, Fed said. Furthermore, issuers can no longer charge fees that exceed the minimum amount in relation with the violation.
This gave rise to controversies as credit card issuers will find "newer and more innovative" to profit on consumers. Analysts say that large companies may dwindle in making new fees. Consumers may find unknown fees in their credit card statements that don't seem to be normal. Credit card users are advised by experts to be keen in spotting these abnormalities.
Some people believe that the new fed rules were created with loopholes and that the Feds aren't really that prepared for the role. The House Committee on Financial Services justified that, as to their belief, the rules are set to promote responsibility and equality in the financial system and that they are confident about appointing the Feds as the agency that will work and protect American credit cardholders and banks.
The new set of rules is expected to take effect on August 22, 2010.