credit cards

Fed limits card fees

Thursday, March 4
Posted: 11 a.m.

On Wednesday, the Federal Reserve Board proposed a rule that addresses remaining provisions of the new credit card law that take effect on Aug. 22, 2010. This last batch of changes under the Credit Card Accountability, Responsibility and Disclosure Act of 2009 includes gift card protections, restrictions on penalty fees and periodic reviews after interest rate increases.

The Federal Reserve called for significant limitations on fees, including a ban on charging a penalty fee that exceeds the dollar amount associated with the violation of the terms. For example, if someone is late making a minimum payment of $30, the late fee could not be more than $30.

According to the Fed's Web site, the amendment to Regulation Z also would:

  • Ban inactivity fees, such as fees based on the consumer's failure to use the account to make new purchases.
  • Prevent issuers from charging multiple penalty fees based on a single late payment or other violation of the account terms.
  • Require credit card issuers to inform consumers of the reasons for increases in rates. 
  • Require issuers that have increased rates since January 1, 2009 to evaluate whether the reasons for the increase have changed and, if appropriate, to reduce the rate.

The 157-page rule will be open to public comments for 30 days from the date it posts to the Federal Register.

Questions? Comments? E-mail

Follow me on Twitter.

Read all of the Plastic Rap blog posts.


Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
Balance Transfer Cards 16.23% --0.00 16.23%
Cash Back Cards 16.49% --0.00 16.49%
Low Interest Cards 11.27% --0.00 11.27%
Credit cards on a table

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.


Credit Card Blog

Jeanine Skowronski

Don’t help crooks crack your card

The Federal Trade Commission is warning consumers about a new scam called card-cracking, which involves turning over your bank account information, PIN number or online banking credentials to crooks.  ... Read more

Partner Center

Connect with us