As credit card companies use new tactics, practices to maneuver around the new credit card regulation, the Federal Reserve is planning on tighten its credit card policy.
“The proposal is intended to enhance protections for consumers and to resolve areas of uncertainty so that card issuers fully understand their compliance obligations,” the Fed said.
Several tactics that Credit Card companies use , such as Citi Bank offering a credit card interest rate at 29.9%, then offered a rebate on up to 70% of finance charges if they paid on time. This rebate would then reduce the rate back to their previously levels. These tactics will be blocked, or severely dampened by the Fed’s new rule amendments.
One of the proposed rules, requires greater transparancy in marketing to consumers with weaker credit histories and/or low income.
The credit-card law, targeting confusing offers that often drew lower-income customers to sign up for costly credit, limited fees to no more than 25% of a card’s credit line in the first year. (Source: WSJ.com)
This more aggressive monitoring suggests the Fed’s original regulation was not prohibiting credit card companies from preying on lower-income consumers.