New Rules Change Credit Card Fees

Tue, Sep 14, 2010

Financial News

More news about credit card changes in the U.S. The Federal Reserve set regulations for credit card issuers which limit penalty fees to $25. The average of existing penalties is $39, so this is welcome news for many card holders having trouble with payments.

The rules do state, however, that there can be an exception to the limit for repeat violators. If, for instance, a borrower has 2 late payment violations in 6 months, the second penalty can be $35 if the bank is able to justify it to regulators.

Another factor is that the penalty cannot exceed the violation, meaning that a bank cannot charge the $25 amount for a missed minimum payment of $15. Also, there cannot be multiple penalties for a single late payment.

While this is good news, it is not a reason to become any more willing to spend recklessly on a credit card. Critics of the rule say that this will keep banks from being able to price their fees according to how risky the borrower is, so it means less people will be able to get credit. Another thing to watch out for is that banks often get creative and come up with new fees when an old type of fee has been outlawed. This development is a good reminder to be careful of your credit score, because as more regulations come a better score will be needed to have the flexibility of available credit. Staying on top of your score plus any new fees or changes coming from the banks will help you get the most efficient use out of credit cards if the need arises.

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