SalemNews.com, Salem, MA

Business

February 22, 2011

Fewer credit card rate hikes after regulations

NEW YORK — Credit card holders are facing fewer interest rate hikes and forking over sharply less in late fees.

A year after new regulations curbed a spate of questionable billing practices, federal officials say over-the-limit penalty charges have also been dramatically curtailed. The findings come from the newly created Consumer Financial Protection Bureau, which will assume responsibility for administering the regulations once it's officially up and running this summer.

The agency is set to present three sets of data at a conference it's hosting Tuesday on the one-year anniversary of the Credit Card Accountability, Responsibility and Disclosure Act, or the CARD Act. Here are the highlights:

Fees & Rate Hikes:

Penalty charges overall are down. In January of last year — just before the regulations took effect — cardholders paid $901 million in late fees. That amount was more than halved to $427 million by November, according to the agency. Also, the number of accounts assessed late fees fell by nearly 30 percent.

One reason for the drop in late fees is a new $25 cap on penalty charges. The fee can rise to $35 only if there's a second violation within a six-month period. That helped bring the average late fee down to $23, from $35.

Consumers also benefited from new rules on interest rates. Issuers can no longer hike rates on existing balances or in the first year after an account is opened. Cardholders must also be given 45 days' notice before the rate is hiked on new purchases.

Before the regulations, about 15 percent of accounts saw rate hikes over the course of a year. That figure fell to just 2 percent in the year after the new rules took effect, according to data supplied to the CFPB by the Office of the Comptroller of the Currency.

Card Issuer Policies:

A separate survey of the nine largest card issuers found that two-thirds no longer charge over-the-limit fees.

Text Only | Photo Reprints
Business

AP Video
Downside of Low Mortgage Rates? Less Selling Cupcake Shop Crumbs Shuttering All Its Stores San Francisco Prepares for Soda Battle Dow Breaks Record 17,000 GM Crash Compensation Could Top $1 Billion GM Won't Limit Crash Compensation Funds Justices Rule for Broadcasters in Aereo Fight Iraqi Strife Fuels Rise in U.S. Gas Prices Harley-Davidson Unveils Electric Motorcycle GM Defect Victims Recount Tragic Accidents GM CEO: Report on Company 'Deeply Troubling' Salmon Migrate by Truck During Calif. Drought Obama: No Major Disruptions in Oil Supplies
NDN Video
'OITNB' Cast Toast to Emmy Nom, Plus Other Nominee Reactions ScarJo Channels Marilyn Monroe Aerial fish restocking in Utah Tiny Hamsters Who Ate Burritos are Back for a Tiny Hedgehog's Party Watch Kelly Ripa Get Soaked! 'Referee' Hands Out Yellow Cards for Social Faux Pas in NYC 2014 Emmy Nominees: 8 Snub Shockers Emma Watson Is Va-Va-Voom in Valentino 7 Infamous Sports Blowouts Argentina tops Holland in World Cup semifinals News flush: Japanese toilet exhibition making a splash Emmy Nominations: What to Watch For 'Game of Thrones' Leads 66th Emmy Awards Nominations Photographic 'Proof' That LeBron Is Leaving Miami - @TheBuzzeronFOX Elephant Pool Party at The Oregon Zoo Must-See! Berry and Fallon Form Human Hamster Wheel Pilot buys pizzas for travelers delayed by storm Klose nets record, Germany rout Brazil 7-1 'Purrmanently Sad Cat' Looks Adorably Sad All the Time Pharrell 'humbled' by success of mega-hit 'Happy'
Comments Trcker