A lot of charges levied for late payment on credit card bills, high fees for not using the credit cards enough in the form of inactivity and interest rates which were just not explicable especially including the sudden changes have not been banned by the US under some sweeping changes. These changes have been out into effect to avoid predatory tactics by credit card issuers.
The US Government, as part of its credit card reform act has capped the penalties that can be levied on late payment to 25 dollars or even lower if the cardholder`s minimum repayment amount is less than that. This will help to end the practice of levying hefty fees for small billing infractions. According to the new rules, the issuers of credit cards are required to give at least 45 days notice for any increase of rates and must provide a strong reason for the changes. The interesting bit is that customers can actually cancel the card if they want to during the notice period. Also interest rates should not be raised in the first one year of a new account. The inactivity fee has been completely done away with and no more fees can be levied because the card hasn`t been used sufficiently.
For many credit card customers in the country, this is one of the most tangible results of the US administration in the efforts to bring about reforms in the financial industry. It has also led to a battle on the Wall Street and a lengthy wrangle in the Congress. The regulations have been backed by the American Bankers Association but there are fears amongst experts that the regulation could lead to an increase in the interest rates. This is because the card issuers might want to make for the loss in revenue due to the regulations.
One of the banking analysts at Credit Suisse, Mosche Orenbuch said that only a small number of customers had paid for the sins of all cardholders. Now the industry is actually going to spread the costs amongst the wider range of customers. These measures have been praised by the consumer advocated as it increases visibility for cardholders. According to Susan Weinstock who is a director at Consumer Federation of America, for financial reforms, consumers would know what they are paying for. It is better that the credit card customers know the fees up front rather than have the companies pick them from the pockets.