Physician Finance Consulting, is pleased to announce that the Congress is FINALLY starting to look at the credit card companies and their unfair credit card practices. Many of us have fallen victim to having to pay late charges because our credit card payment was late(even by one hour) or had our interest rate increased to 18-29% . When you contact your credit card company, you usually receive very little customer service and it’s rare they will change the rate or delete the late charge. In the meantime, we receive tons of mail asking us to sign up for their 0% program only to find out a few months into the contract that buried somewhere in the very tiny print was a clause that stated if we were late on our payment(even one hour) the 0% program was void and the rates would go up to a high rate.
PFC, found this article on www.msn.com May 2, 2008.
Physician Financing Consulting and Professional Finance Consulting offers consulting services and loan programs for all businesses. We work to ensure the best rates with the least personal and business risk to the business owner. For more information on our working capital loans, debt consolidation loans, equipment leases/loans, practice acquisition loans, and lines of credit please go to www.pfcfinance.com.
MSN wrote:
3 federal agencies move to reverse years of increasingly aggressive penalty fees, demanding more time for cardholders to pay and fewer tricks and hidden fees.
By MSN Money staff and wire reports
Regulators are planning tighter rules to stop credit card companies from unfairly raising interest rates and to make sure they give people enough time to pay their bills.
In the most far-reaching crackdown on the credit industry in decades, the Federal Reserve and two federal agencies are proposing new rules that would prohibit:
Placing unfair time constraints on payments. A payment could not be deemed late unless the borrower was given a reasonable period of time, such as 21 days, to pay.
Unfairly allocating payments among balances with different interest rates. The proposal would require that payments above the minimum be applied in a way that was “beneficial” for the cardholder. For example, a payment above the minimum would go toward a large balance at an 18% annual percentage rate rather than a small 0% balance transfer.
Unfairly raising annual percentage rates on outstanding balances. The rule would ban retroactive interest-rate increases on existing outstanding balances unless a consumer was 30 days late on the account. Banks would not be able to retroactively raise rates on good customers for activity unrelated to the specific card, such as a late payment on a mortgage.
Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account, usually by rental car companies or hotels
Unfairly computing balances with methods such as “two-cycle billing,” which can result in an interest charge even in a month in which the cardholder carries no balance.
Unfairly adding security deposits and fees for issuing credit or making credit available. The rules would ban fees that consumed a majority of a new card’s credit limit.
Making deceptive offers of credit. Card offers would have to clearly state the factors required to achieve the interest rate and credit limit advertised.
The Fed, which is expected to vote this afternoon on its approval of the proposed rules, is acting in conjunction with the National Credit Union Administration and the Office of Thrift Supervision. The identical proposals would cover banks, credit unions and thrifts, respectively
A good start, most say
Credit card lenders last year collected more than $18 billion in penalty fees, according to data collected by consulting firm R.K. Hammer.
MSN Money columnist Liz Pulliam Weston, the author of three books about credit and debt, said the rules would be “better than nothing” but don’t go as far as they should. She prefers the even stricter reforms in the Credit Card Bill of Rights sponsored by Rep. Carolyn B. Maloney, D-NY.
Weston especially likes the provision in Maloney’s bill that would allow banks to use the term “fixed rate” only when the rate couldn’t change or vary for any reason. Currently, the term means little. And when rates changed, Maloney’s bill would give cardholders the right to opt out within three billing cycles and to cancel their cards and repay the balances under the existing rates.
“Maloney’s bill goes much farther in securing cardholders’ rights and preventing some of the worst abuses,” Weston said.
(To push Congress to go even further, read the Credit Card Bill of Rights, and e-mail your lawmakers now to let them know if you think the reforms above aren’t enough. Find your member of the House in the Write Your Representative directory. Mention bill number HR 5244 in your message.)
Maloney said in a statement that she was pleased the Fed had adopted some aspects of her legislation.
But she also expressed concern that “by the time the Fed gets around to finalizing these credit card reform proposals, they will be watered down and come too little too late for consumers who need relief now.”
Travis Plunkett, the legislative director for the Consumer Federation of America, said that while he hadn’t yet seen the details, the rules “appear to address some of the most significant abuses in the credit card marketplace right now.”
The rule changes outlined Friday drew support from the publisher of Consumer Reports .
“This proposed rule finally acknowledges that some practices just aren’t fair,” the Consumers Union said in a statement.
The banking industry was expected to fight.
“This is a very aggressive regulatory intervention in the marketplace that will lead to higher prices and less credit options for everyday consumers,” Ken Clayton, the senior vice president of card policy of the American Bankers Association, told The Washington Post. “It basically says that we can’t price for risk and we can’t in a cost-effective way provide these low-cost options like balance transfer opportunities at zero percent interest because of the way they’re mandating how these loans get paid back. We won’t be able to make the loan.”
The new regulations now face a 75-day public comment period and could be completed by the end of the year. Similar steps have been proposed in both houses of Congress.
