The Federal Reserve’s final new rule involved in the implementation of credit card changes takes effect August 22 and will protect consumers from unfair penalty and inactivity fees, said Ohio Attorney General Richard Cordray.
"Consumers have been demanding these changes for years," Cordray said. "These rule changes are a step in the right direction. Soon credit card companies will no longer be able to charge consumers excessive late fees or charge them multiple penalty fees for a single late payment."
Among several provisions, the rule:
Generally prohibits late fees that exceed $25.
Prohibits penalty fees that exceed the dollar value of the violation. (For example, the rule would prohibit a $39 late fee on a $20 minimum payment.)
Requires most gift cards to last at least five years and bans gift card inactivity fees for at least the first 12 months after the issue date.
Requires credit card issuers to re-evaluate interest rate increases implemented since Jan. 1, 2009 and, if appropriate, reduce interest rates.
Prohibits multiple penalty fees based on a single late payment.
Most of these provisions take effect August 22. This new rule is the third phase of the Federal Reserve’s implementation of the federal Credit Card Accountability Responsibility and Disclosure Act of 2009, which was enacted in May 2009.
To learn about earlier credit card changes, visit www.OhioAttorneyGeneral.gov/CreditCardChanges.
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