The US Office of Thrift Supervision has developed new rules to put a stop to some nasty practices of credit card issuers. The fact sheet they put out describes the major changes. This is good news not only for consumers but also for the credit card issuers who were already following these rules because their competition will be forced to play on a more level playing field.
Most of the new rules are self-explanatory. Interest rate increases must take place at defined times with adequate notice for card holders. Consumers must be given at least 21 days to make a payment.
A fairly substantial change is the rule ending double-cycle billing where the average balance over two months is used to calculate interest. This practice causes interest to continue for another month after you pay your bill in full. Now interest will be based on just the current month.
The last new rule places restrictions on predatory high-fee subprime cards. These are high-fee, low-limit credit cards given to people who are poor credit risks. In some cases the fees chew up most of the consumer’s borrowing limit right away. The new rule says that if fees exceed 25% of the available credit limit, then they have to be spread out over at least 6 months.