The Fed proposed rule changes today that would aid consumers with some “iffy” practices by credit card companies.
The Proposals:
* Banks would be prohibited from increasing the rate on a pre-existing credit card balance (except under limited circumstances) and must allow the consumer to pay off that balance over a reasonable period of time.
* Banks would be prohibited from applying payments in excess of the minimum in a manner that maximizes interest charges.
* Banks would be required to give consumers the full benefit of discounted promotional rates on credit cards by applying payments in excess of the minimum to any higher-rate balances first, and by providing a grace period for purchases where the consumer is otherwise eligible.
* Banks would be prohibited from imposing interest charges using the “two-cycle” method, which computes interest on balances on days in billing cycles preceding the most recent billing cycle.
* Banks would be required to provide consumers a reasonable amount of time to make payments.
Here is the whole release:
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