If you have ever been late on paying the bills of your ever credit card and instead ended up paying a hefty late fine, then you can finally breathe a sigh of relief. Federal Reserve Board has implemented on August 22nd, the third and the final phase of the credit card laws under the Credit Card Accountability, Responsibility and Disclosure Act of 2009. This card has fundamentally changed the way credit card companies operate and might also affect the profitability of the companies.
One of the most significant laws that will now be in effect is the cap that the Fed has placed on the maximum late payment fee that can be levied on the customers. The first late payment fee now cannot exceed 25 dollars. It can be extended to 35 dollars for a subsequent offense if the late payment is repeated within a period of half a year. Also the late fee now cannot exceed the minimum amount that is owed by the customer. In the past credit card companies would levy late payment even if the amount due was just 15 dollars. Now it cannot exceed 15 dollars if that is the amount owed. Only in exceptional cases, the credit card companies can levy greater fine if they can demonstrate that the losses incurred by the company are more than the late fee charged.
There are a few more rules and regulations that will come into effect on August 22nd. One of the prominent ones is that consumers cannot be charged with multiple penalty fees. This means if a customer is late on payment and the credit line is crossed due to the late fee charged then unlike in the past, the fine for crossing credit line cannot be charged as late fee as already been charged. Most importantly, card holders cannot be charged with an inactivity fee. This means customers wouldn`t be charged anymore for not using the credit card enough as used to be the case in the past.
The new rules also state that if the credit card issuers make drastic changes then they have to explain to the customers why. Also the annual percentage rate cannot be increased during the first year. Also the credit card issuers have to give a 45 days` notice before increasing the annual percentage rate or make any other significant changes before the transactions of the customers. Customers can also cancel the card in that period.