Fed Approves Final Credit Card Rule
The Credit CARD Act of 2009 put forth certain consumer protections concerning credit cards. On Tuesday, a final rule was approved by the Federal Reserve Board.
The newest rule will ask credit card companies to reconsider increases in interest rates that were put in place at the start of 2009. It will also address unreasonable late payment and other penalty fees, the Fed said.
Federal Reserve Governor Elizabeth Duke said that "the new rules require that late payment and other penalty fees be assessed in a way that is fairer and generally less costly for consumers. Card issuers must also reevaluate recent interest rate increases and, if appropriate, reduce the rate."
Credit card issuers will also be prohibited from charging more than $25 for a late payment fee or issuing multiple penalties for a single violation. Inactivity fees have also been banned, according to the Fed.
This final rule is the third stage of the CARD Act, the Fed said. It will go into effect beginning August 22.
The credit card legislation was created in order to protect consumers from issuers' allegedly predatory practices.