The Federal Reserve has proposed new rules that would actually help the consumer (you!) in getting out of credit card debt. You have until August 4th (next Monday) to submit your public comment on the proposal and hope to sway the decision of the all powerful Federal Reserve. Word is, they will decide on the proposal by the end of the year.
A brief overview of the proposed rules:
- Credit card companies couldn’t increase your rate on the balance you already have and they must allow you “reasonable” time to pay off the balance.
- They couldn’t apply your extra payments only toward your balance with the lowest interest (I HATE the way they do that!) This one would help out everyone who has special low interest rates on part of your balance.
- They couldn’t use the “two-cycle” method, which basically charges you interest on what you have already paid off. (Read How Two-Cycle Billing Works)
- They need to give you a reasonable amount of time to make your payments. My husband had an evil Citi Personal Loan that would continually send him the payment stub on the 2nd or 3rd of the month when it was due on the 5th… AND you couldn’t make online payments… AND pay by phone was an extra $5…. AND if you didn’t use their exact payment stub your payment would get lost in their system, trust me, we tried.
In addition to the Federal Reserve proposal, several legislatures are trying to take a stand against the credit card companies with bills that help the consumer. Rep. Carolyn Maloney of New York has created the Credit Cardholder’s Bill of Rights. Some of the items in the Bill of Rights resemble the proposal, and then takes it a bit farther to give the consumer more power. Sen. Christoper Dodd of Connecticut also has legislation that follows the proposal and adds a few more rules, like not allowing them to charge a fee to pay over the phone (hint – Citi).
Overall I think it is good that the economic turbulence has at least shined a spot light on some of the poor practices of credit card companies and mortgage companies. Maybe this unfortunate down turn will outcome in greater consumer rights and power. Power to the people, and stuff like that…
To read about the Federal Reserver proposal: Fed. Reserve Proposal
To submit a comment about the proposal: Comment on Proposal
To read about Rep. Maloney’s Bill of Rights: Credit Cardholder’s Bill of Rights
To read about Sen. Dodd’s Legislaton: Sen. Dodd’s Credit Card Reform
July 30th, 2008 at 8:15 pm
Well said… Great information, keep up the great work!