(CBS/AP) The Federal Reserve and other regulators initiated steps Friday to end “unfair and deceptive” credit card industry practices assailing consumers who are already struggling to cope in a bad economy.
The proposed rules would be the biggest clampdown on the industry in decades, aiming at protecting people from credit card companies that arbitrarily raise interest rates or don’t give borrowers adequate time to pay their bills.
The proposals would also restrict such lender practices as allocating all payments to balances with lower interest rates when a borrower has balances with different rates. The Fed board voted Friday to approve the recommendations.
Federal Reserve Chairman Ben Bernanke said the proposed rules “are intended to establish a new baseline for fairness in how credit card plans operate.” Consumers using credit cards “should be better able to predict how their decisions and actions will affect their costs,” he said.
“For markets to work, people have to understand what it is they’re buying and paying for and if they do they can make better choices and the market will work better,” Bernanke said.
Regular folks like Dennis English, a trucker in Augusta, Ga., has been duped by credit card companies in the past.
“It started out at 9.9 percent interest rate and last month when I went to pay my bill I happened to notice that it went up to 32.99 percent,” English told CBS News Correspondent Nancy Cordes. “I told them, you’re forcing people to bankrupt!”
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