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Fed rules require interest rate review, while debt consolidation may reduce rates
By Peggy Stillwell on Jun 15th, 2010
A number of rules have taken effect recently to protect consumers who use credit cards, and the Federal Reserve Board recently announced a number of final regulations.
According to the Fed's changes, credit card companies will not be allowed to charge more than $25 for making a late payment or violating the terms of a card agreement. The exceptions to that new regulation include a situation where the consumer is repeatedly late or if the account issuer can show the higher fees represent a reasonable amount of its costs.
"The new rules require that late payment and other penalty fees be assessed in a way that is fairer and generally less costly for consumers," Elizabeth Duke, Fed governor, said.
Regulations also prohibit companies from assessing a number of penalties for one late payment and require them to evaluate interest rate increases made since January 1 of last year.
If the circumstances that led to the rate increases have changed, card companies are required to reduce rates. However, some consumers may find their rates are still high, which makes paying off debt difficult.
People in that circumstance may consider debt consolidation, which can help provide lower interest rates.
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