Things are looking up for consumers when it comes to credit cards. The Federal Reserve has stepped up to clarify some of the regulations put into place with the CARD Act, USA Today reports. But what do these clarifications mean for you?
Here we outline the three specific amendments, which will go into effect on Oct. 1.
Card issuers can assess an applicant’s ability to repay debt using individual income or salary, instead of household income.
The term “household income” has been deemed too vague. This new process will help keep banks from issuing cards to consumers who can’t pay off their debt, but it could also unintentionally target stay-at-home moms, who share income with their spouses.
Fees charged in the first year of the account max out at 25% of the credit line, including any fees charged before an account is opened, such as application fees.
This will keep first-year fees under control, but it might also open the door for credit card issuers to begin charging higher application fees.
Card issuers are prohibited from raising or revoking promotional interest rates, including the waiver of interest charges.
The only exception to this regulation is when an account becomes more than 60 days delinquent. Could this new clarification mean that credit card issuers become even more cautious when approving applicants?
Bottom line: Just as with any new credit card rules and regulations, be sure to understand what it means for you. These amendments don’t go into effect until the fall, but it’s important to understand them now and prepare accordingly, especially if you’ll be in the market for a new credit card soon.
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