Fed Clamps Down On Credit Card Loopholes

To shut down “fee harvesters” and other crafty tricks credit cards cooked up to escape the CARD act, the Federal Reserve has proposed three ways to tighten and clarify the rules.

1. The CARD Act say no no to fees over 25% of the credit limit in the first year the card was opened. Some cards have been avoiding this by charging a hefty “processing fee” that applied before the account was opened. So the Fed says wants this part of “Regulation Z” to also apply to any upfront fees.

2. Under the CARD Act, credit cards aren’t allowed to revoke promotional interest rates unless payment is over 60 days late. Some issuers got around this by turning the offer into some other kind of waiver or rebate of interest and feed, so the Fed has proposed that this rule applies to those as well.

3. When evaluating income to determine credit worthiness and credit limit, credit card companies should look at individual, not household income. So what happens when one partner is not working? They’re supposed to open a joint or authorized account with the breadwinner.

Hm, I could see that one leading to some “Staying together for the sake of the credit cards” relationship scenarios.

For the full run-down, check out the whole docket in the Federal Register.

Press Release [Federal Reserve]

Truth in Lending; Proposed Rule [Federal Register]
Fed Aims to Tighten New Rules for Credit [WSJ]
Federal Reserve Board Clarifies Some Credit Card Rules [Lowcards.com]