Those with credit card debt stand to get more help from the government. The Federal Reserve Board approved a rule that will stop card issuers from charging excessive fees.
Now card issuers cannot charge more than $25 for late payments unless a higher fee is proportionate to expenses incurred from the terms of the card agreement being broken.
Card issuers are also prohibited from assessing multiple penalties for a violation in terms and from charging “inactivity” fees if a card is not used frequently.
The law is intended to force card companies to be more fairer toward consumers and to result in card issuers restructuring how they assess fees.
“The new rules require that late payment and other penalty fees be assessed in a way that is fairer and generally less costly for consumers,” says Federal Reserve Governor Elizabeth Duke. “Card issuers must also reevaluate recent interest rate increases and, if appropriate, reduce the rate.”
The Credit Card Accountability, Responsibility and Disclosure Act became law in May of last year. Some provisions have already taken effect, while the most recent rules will be enforced at the end of this August.