New federal credit card regulations should help to take a bite out of some of the fees companies charge and make consumers more informed about what they’re paying.
The reforms that took effect Sunday limit some of the fees cardholders can be charged and also provide more disclosure on interest rate changes. Paul Egide with the state Department of Financial Institutions says they’re intended to improve consumer protection and bring more fairness into the transaction.
One of the strongest changes comes from credit card companies no longer being able to stack late fees and penalties. The new rules cap fees at your monthly minimum payment or $25, whichever is less. Egide says that helps to remove some of the unfairness from someone being late with a $10 minimum payment, only to face a $39 late fee.
If your annual percentage rate is increased, companies will now need to make it clear why that happened. Egide says that likely won’t prevent rates from going up, but it gives consumers some direction on to how they can get their rate back down. Companies are now required to re-evaluate interest rate hikes every six months.
The new rules are the second and final phase in implementing federal financial reforms. The first wave of new regulations took effect in February.