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Proposed Credit Card And Banking Regulations

By admin on October 29th, 2011

It looks like the government will be getting serious about credit card regulations. The Federal Reserve Board proposed rules to prohibit unfair practices regarding credit cards and overdraft services that would among other provisions, protect consumers from unexpected increases in the rate charged on pre-existing credit card balances.

Regulation AA (Unfair Acts or Practices)
The proposal would amend Regulation AA to prohibit unfair or deceptive acts or practices by banks in connection with credit card account 00004000 s and overdraft services for deposit accounts.

Credit Cards

- More Time To make Payments
The proposal would stop banks from treating a payment as late unless the consumer has been provided with reasonable amount of time to make that payment. There would be a new safe net for banks that send periodic statements at least 21 days prior to the payment due date.

- Allocation of Payments
When you have a credit card with different balances (for example, purchases, and cash advances), typically the annual percentage rate (APR) is higher on the cash advance. When you make a payment on a scenario like this the bank will apply your payment to the lower of the two. With the new regulation the payment will be split equally amongst the two balances. In addition, to enable consumers to receive the full benefit of discounted promotional rates (for example, on balance transfers), during the promotional period payments in excess of the minimum would have to be applied first to the balances on which the rate is not discounted.
- Two-Cycle Billing
The proposal would stop banks from imposing finance charges based on balances on days in billing cycles preceding the most recent billing cycle. Credit card issuers will not be allowed to use previous billing cycles to calculate interest on your current bill. Current double cycle billing uses the average balance from the previous two months to calculate interest charges, even if you paid part of the previous balance.

- Rate increases to existing balances
Credit Card companies will not be able to increase you APR on existing balances, unless you had a promotional offer and/or was late on a payment

- Less bait and switch credit card offers
The proposal would require banks making firm offers of credit advertising multiple APRs or credit limits to disclose exactly what the qualifications would be for those terms.

- Finance of Security Deposits and Fees
The proposal would address concerns regarding subprime credit cards by prohibiting banks from financing security deposits and fees for credit availability (such as account-opening fees or membership fees) if charges assessed during the first twelve months would exceed 50 percent of the initial credit limit. The proposal would also require financed security deposits and fees exceeding 25 percent of the initial credit limit to be spread over the first year.

- Credit Card Holds
The proposal would prohibit banks from imposing a fee when the credit limit is exceeded solely because a hold was placed on available credit. This can occur where the final dollar amount of a transaction was not known in advance (for example, when a consumer checks into a hotel, a hold is placed for the expected cost of the stay).

Overdraft Services

- Debit Holds
This proposal would stop banks from charging a fee when an overdraft takes place to due to a hold placed on available funds in an account.

- Right to opt out
The proposal would stop banks from imposing a fee for paying overdraft unless the bank gave the consumer an opportunity to opt out of the payment of overdrafts and the consumer has not done so. This would apply to all transaction types. This would also be applied to overdrafts resulting from ATM and point of sale transactions.

7 Responses to “Proposed Credit Card And Banking Regulations”

1. nightfire4107 says:

   November 3, 2011 at 2:13 am

   Which bank is the best for a student credit card?
   I get confused from all the research.
   Which would you preferred to be the best bank for a student credit card?
   EASY 10 Points
2. Feather says:

   November 16, 2011 at 9:27 pm

   Chase is wonderful just bought over Wamu and has tons of atms. I have been with them 2yrs and always great if any problems, which is seldome. They are friendly people and I got my first student cc there too!!! Go check them out!!!
3. ziggy s says:

   November 20, 2011 at 10:12 am

   Will the bank close my student credit card when i graduate.?
   I want to open my first credit card to build some credit. Will the bank close my credit card when graduate from college. i know you should keep your first credit card if it has good credit. so should i open a student credit card or a different one?
   Yes, im 19. thanks for the info.
4. Ha H says:

   December 3, 2011 at 11:09 am

   Can I borrow money from the bank if I have a student credit card?
   Hello, just a question. any help would be greatly appreciated.

   so i have a student credit card from bank of america. would the bank let me borrow money to buy a house if i ever consider buying one if i have good credit history for my student credit card? or i can’t? thanks
5. Judy says:

   December 6, 2011 at 12:06 am

   Student credit card is really not any different than any other.
   One day, when you graduate, you can call them up and ask them to change the name.
   Remember to pay in full each month – employers will be looking at your credit, and carrying balances reduces credit worthiness.

   Now, are you under 21?
   New laws are passing next year that no one under 21 will be able to open a credit card without a parent or co-signer. The news is keeping this a secret so that thousans of 18 years olds don’t rush in applications.
   Better hurry if you want that credit card.
   I’m not sure if the law is passing in Janurary or February.
   /
6. YankeeFanatic says:

   December 30, 2011 at 12:17 pm

   I want to apply for an Apple store credit card. But I already owe around $900 on my student bank card?
   I want to purchase an iPad and finance it. But I am a little but worried because I already owe a little bit on my main student credit card. Will my application still be accepted?
7. Kerry says:

   December 30, 2011 at 5:25 pm

   depends on income, but more than likely since you have 900 big ones out there already

   and not paid out…and dont know how long you’ve had that hanging out there, or if you’re

   paying it off w/min. payments each time……you should be denied for your own good. It looks

   to me you are over extended and need to reign in your ‘wants’ there…cuz you’re always going

   to ‘want’ something……..you’re headed in the wrong direction there, for your own good.