Have a say on credit card rules

July 13, 2008|By Andrea Coombes | Andrea Coombes,MarketWatch

SAN FRANCISCO - If you've ever complained about an unexpected interest-rate increase on your credit card, now is your chance to have your gripe heard. But you don't have much time.

The Federal Reserve is accepting comments through Aug. 4 on credit card reform rules it proposed in May. (The deadline for comments on related proposals, mainly to do with credit card disclosures, is sooner: July 18.)

More than 9,300 people have commented on the sweeping set of proposed changes that, among other things, would prohibit credit card companies in some instances from hitting you with a higher interest rate on debt you've already incurred.

Or, if you've ever accepted a "balance transfer" offer with a low interest rate, only to find that your payments go first to that cheaper debt, rather than to the higher-rate purchases you've made, that situation would change, too. Under the Fed's proposal, credit card issuers would need to apply at least a portion of your monthly payment to higher-rate debt, in most cases.

The proposed rules also would prohibit "two-cycle billing," in which banks compute interest on debt on days preceding the most recent billing cycle, a practice that can result in borrowers paying interest on debt paid off during the previous month's grace period.

The Fed's proposed rules are "much better than we expected," said Lauren Saunders, managing attorney of the National Consumer Law Center's Washington office. "There are some real improvements in them."

Plenty of consumers agree, judging by the comments posted to the Federal Reserve site. The Fed doesn't keep a running for-or-against tally, however.

It's not unusual for consumer-related proposals to generate about 1,000 comments, Federal Reserve spokeswoman Susan Stawick said. A recent high was more than 45,000 comments related to a December 2000 proposal to allow financial holding companies to act as real estate brokers, she said.

To comment on the proposed rules, go to www.federalreserve.gov, click on "Consumer Information" at the top of the page, click on "Proposed Rules for Credit Cards and Overdraft Services," scroll to bottom of the page, and under "Regulation AA," click on "Submit Comment." Comments are public.

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