“Stop Unfair Practices In Credit Cards Act” was announced. If passed, the legislation introduced by Senator Carl Levin (D-MI) will stop credit card companies from charging certain fees and interest rate increases.
The act proposes to eliminate several costly practices of credit card companies.
- Interest rate charges on purchases that were made before the rate became effective. If you make a purchase on May 1 and the interest rate increases on May 2, it makes sense that your purchase should not be subject to the new interest rate.
- No fees ever for paying your credit card bill. Many creditors charge a fee for various methods of payment, especially payments made by telephone. The new bill would prohibit these types of fees.
- Double cycle billing and other billing methods that charge interest on balances that have already been paid. This, I believe, is robbery. There’s no legitimate reason for charging consumers interest on a balance they’ve already paid.
While I agree that lawmakers should be involved in regulating the credit card business, I worry that some laws make it easy for credit card users to spend irresponsibly.
- Penalty interest rate increases will be limited to 7%. This would prohibit doubling and tripling interest rates because of a single late payment, over-the-limit charge, etc.
I like the idea of a staggered increase of 1-2% per incident with a cap of 7% for two reasons. Cardholders who only miss one payment in the life of their credit card shouldn’t receive the same penalty as someone who is chronically late with payments. I also believe that if subsequent incidents aren’t subject to an interest rate increase, cardholders don’t have as severe consequences to face when they miss a payment or go over their limit.
- Over the limit fees will only be charged once unless the cardholder makes additional charges while the balance is over the limit. If there’s no penalty for remaining above the credit limit, how many cardholders will be motivated to reduce their over-the-limit balances?
The fear of multiple over-the-limit fees keeps some credit card users from maxing out their credit cards. It’s possible that reducing the number of times the fee can be charged will create the notion that it’s not so bad to max out your credit card.
If penalties and fees are forcing some credit card users to spend responsibly, what’s going to keep them from paying late and going over the credit limit when the penalties are reduced or removed?
0 komentar
Posting Komentar