by Sundeep Kothari
Proposed new credit card rules
In May of 2008, the Federal Reserve Board proposed new rules for credit card companies. These include:
1. Banning banks from raising interest rates until a minimum payment is at least 30 days late, a promotional rate is expiring or the customer has a variable rate.
2. Encouraging banks to send statements at least 21 days before the due date.
3. Banning the widespread practice of applying payments to low or no interest balances first, then higher balances.
4. Banning banks from charging over-limit fees if the limit is exceeded because of a hold placed on the account.
These new rules are certainly good, but are not enough. Here is another rule that I support: Reducing the default rate from 31% down to 20% on credit cards. This would have the effect of allowing people to pay down their debts at a faster rate. In addition, individuals will have more money to pay their mortgage payments, which will reduce foreclosures. Also, people will have more money to pay down their student loans, and other personal loans. Instead, when the interest rate is jacked up to the default rate, then many people go ahead and file for bankruptcy. And then banks get nothing in return. By reducing the default rate, banks will have more liquid cash, gain more stability, and the credit market will have some thawing.
Atlanta Georgia Bankruptcy Blog 
