Government Cracks Down on Unfair Credit Card Practices

The federal government today approved new rules that would ban certain financial institutions from engaging in unfair credit card practices.

The steps taken by the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration represent the most significant reform of the credit card industry in decades.

The government today banned banks, credit unions and savings associations from a number of practices. Among the practices to be prohibited are: raising interest rates on existing balances unless a payment was received more than 30 days late; charging a late fee if a borrower was given less than 21 days to pay; and applying payments in a way that would result in debts with higher interest rates getting repaid last. In the subprime credit card market, which caters to borrowers with poor or mediocre credit histories, fees that reduce the credit available to them would be restricted. Financial institutions will have to comply with the new regulations by July 1, 2010.

They’re given a year and a half to ream people before they have to comply?