So Congress has passed measures that will restrict Credit Card companies. Only problem is that they will not be effective until July 1, 2010. Plenty of time for the companies to raise rates on current balances.

Here are the measures passed.

Final Rule The final rule amends Regulation AA to prohibit unfair or deceptive acts or practices by banks in connection with credit card accounts. The effective date for the Regulation AA amendments is July 1, 2010.

Time to Make Payments
The final rule prohibits banks from treating a payment as late for any purpose unless the bank provides a reasonable amount of time for the consumer to make that payment. The rule provides a safe harbor for banks that send periodic statements at least 21 days prior to the payment due date.

Allocation of Payments
When different annual percentage rates (APRs) apply to different balances on a credit card account (for example, purchases, balance transfers, cash advances), the final rule requires banks to allocate payments exceeding the minimum payment to the balance with the highest rate first or pro rata among all of the balances.

Increasing Interest Rates
The final rule requires banks to disclose at account opening all interest rates that will apply to the account and prohibits increases in those rates, except in certain circumstances. First, if a rate disclosed at account opening expires after a specified period of time, banks may apply an increased rate that was also disclosed at account opening. Second, banks may increase a rate due to the operation of an index (in other words, the rate is a variable rate). Third, after the first year, banks may increase a rate for new transactions only after complying with the 45-day advance notice requirement in Regulation Z. Fourth, banks may increase a rate if the minimum payment is received more than 30 days after the due date.

Two-Cycle Billing
The final rule prohibits banks from calculating interest using a method referred to as “two-cycle billing.” Under this method, when a consumer pays the entire account balance one month, but does not do so the following month, the bank calculates interest for the second month using the account balance for days in the previous billing cycle as well as the current cycle.

Financing of Security Deposits and Fees
The final rule addresses concerns regarding subprime credit cards with high fees and low credit limits. Banks would be prohibited from financing security deposits and fees for credit availability (such as account-opening fees or membership fees) if charges assessed during the first 12 months would exceed 50 percent of the initial credit limit. The rule also limits the security deposits and fees charged at account opening to 25 percent of the initial credit limit and requires any additional amounts (up to 50 percent) to be spread evenly over at least the next five billing cycles.

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Now that the Fed has lowered the rate for banks to borrow money to zero per cent, do you think our credit card rates will go down?

Congress is now debating a proposal for restrictions on interest rate increases by Banks and Card companies. As it is now they can not only raise the rate for no reason at all. That’s what happened to me when my rate went from 9% to 21 %. I hadn’t missed any payments or gone over my credit limit. They just raised the rate.

People are struggling to keep up with payments after rates are increased on balances they have run up. It’s time that some restrictions are put on the banks. I can see where if you’re late on payments or have exceeded your credit limit that they might raise the rate.

My feeling is that if they want to raise my rate it should be limited to future purchases, not the current balance. I hope that Congress acts soon.

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