Credit card holders can breathe a sigh of relief. Some new rules are going into effect on Sunday which will put a full stop to many predatory practices of credit card companies and banks. According to one of the new provisions, when a charge exceeds your credit card`s credit line, an overdraft fee of more than the charged amount cannot be assessed. This is big news for both credit card customers and credit card issuers, who have earned massive revenues in the past through some dubious practices involving late fee and other penalties.
The new rules have brought some of the more odious practices applied by the credit card companies and banks to a screeching halt. One such odious practice involves levying a fee of 39 dollars when only your 3 dollar coffee has caused your credit card amount to go into overdraft. Another dubious practice that has been outlawed by the latest regulations and norms is where credit card issuers usually charge the higher costing articles first and debiting them instead of going as per the chronological order.
Even before these laws come into effect, last week a court had ordered Wells Fargo to repay customers an amount of over 203 million dollars for supposedly deceptive and unfair business practices. This was because the credit card company had charged multiple overdraft fees thus raking in a lot of illicit income. According to US district judge William Alsup, Wells Fargo had been profiteering and gouging from the customers. According to what the judge wrote, there seemed to be no doubt from the emails and internal bank memos that the primary motive of the company was to maximize the total number of overdrafts. This was because overdraft revenue seemed to be a very big profit center.
An unsuccessful argument was provided by Wells Fargo that customers wanted and even benefited from these policies, according to the Associated Press. According to the new rules, overdrafts on debit cards are not allowed anymore without the permission of the customer. Other new rules that are going into effect from Sunday include laws where credit card companies cannot assess more than 25 dollars as late fees unless the customer had a late payment previously in the last 6 months. In that scenario a late fee of 35 dollars can be levied on the customers. However, the credit card company can impose a greater penalty by justifying that the costs of the late payments were higher.