The pressure that Congress has been placing on credit card companies to make policy changes for the benefit of cardholders appears to be getting results, even though nothing has been officially passed yet.
Bank of America has also made some changes. The card will still be raising the rates on cardholders that make late payments or that exceed their credit limits. They will, however, return the cardholder to the previous rate after making six months of payments on time. The Discover card has also issued a new card, called the Motiva, that allows cardholders to earn a rebate equivalent to one month’s worth of interest after making six of their payments on time.
Individual states have also started to take action. In Nevada, for example, universal default has been banned already. The New York legislature has passed a similar bill that is just waiting to be finalized with the governor’s signature. With this bill, card issuers that do business in New York will not be allowed to enforce universal default policies on New York residents.
On the federal level, a number of issues revolving around legislation changes are being addressed. These include:
- Barring the enforcement of interest charges on debt that has been paid during a grace period
- Barring the addition of trailing interest charges on debt that has been paid on time and completely
- Only permitting rate increases on fixed rate accounts when introductory rates have expired and when cardholders break card agreements. The same would be true for variable rate cards, though the prime rate can still effect the interest rate
- Requiring that new interest rates only get applied to the debts that developed after the rate has changed
- Prohibiting interest charges from being applied to over-the-limit fees and late fees
- Requiring that issuers offer customers the option to have a fixed credit limit, which cannot be exceeded
- Prohibiting fees when paying a bill by phone, mail, or electronic transfer
- Requiring that payments be applied to the portion of the card balance with the highest interest rate
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