The Federal Reserve proposed new credit card regulations Friday in response to growing rancor over credit practices that are widely regarded as unfair and deceptive. Robin Farzad of BusinessWeek Magazine explains the details and possible effects.
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The proposal from the Federal Reserve and other regulators to end unfair and deceptive credit card practices comes as millions are struggling to keep up with their payments.
Among other things, the proposal would require companies to: provide adequate time to make payments, such as 21 days; prohibit excessive fees and unfair balance calculations; and prevent firms from increasing the annual interest rate on a borrower's existing balance.
For more, we turn to Roben Farzad of BusinessWeek.
And, Roben, American consumers have run up an estimated $850 billion in balances. Why move to regulate what had been a lightly regulated industry up until now?
ROBEN FARZAD, Editor, BusinessWeek:
Well, there's really a double purpose here, Ray, one, in that regulators are really seeing a backlash from consumers. And lawmakers in Congress are being asked, where were you? Where were the regulators amid the subprime bust? So many people felt bamboozled and conned.