Steps have been taken by the Federal Reserve, the Office of Thrift Supervision, and the National Credit Union Administration to change behaviors and practices by Credit Card companies by July 1, 2010;
The net result will prohibit:
- Raising interest rates on existing balances unless payments are greater than 30 days late
- Charging Late Fees if borrower has not been given at least 21 days to pay
- Applying payments in a way that results in higher interest rates getting paid last
Banks and Credit Card Companies in this $970 Billion Dollar industry exclaim that this will result in higher interest rates and fees for the sub prime credit market, however, consumers welcome the changes in practices. The changes come in line with the latest Fitch Retail Credit Index, showing current 60-day deliquencies increasing by nearly 24% from August to 4.8%. This may make those luxury credit card consumers even more attractive to credit card companies, as they have less leeway to charge the sub prime credit borrowers going forward.