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Consumers will enjoy enhanced safeguards from the deceptive practices of credit card companies -- including protection from unexpected interest rate hikes and late fees in many cases -- under new federal regulations.
The new rule announced Thursday, and expected to be approved shortly by the Federal Reserve, "bans practices often cited as unfair to consumers, such as raising the interest rate on an existing credit card balance when the consumer is paying the credit card bill on time," according to a Thursday Press Release from the Office of Thrift Supervision, a division of the U.S. Department of the Treasury. Under the new rules, consumers must also be given reasonable time to make credit card payments, and card companies are prohibited from using payment allocation methods that unfairly maximize interest.
Reuters reports that "In 2007, Americans used an estimated 694.4 million credit cards with Visa, MasterCard, American Express and Discover logos." According to the Washington Post, the new rules "hand a victory to consumer groups who have long complained of lax oversight of the $970 billion industry," and "the credit card industry was not able to beat back the most sweeping overhaul in decades."