Credit Card Reform: About Damn Time... and Not Enough.

Credit card companies (aka loan sharks) got a whack to the knees today.  It was too long in coming and it wasn't enough but it was something. Federal regulators agreed to some new rules that will help protect consumers from increases in interest rates on existing account balances and excessive fees.

But the new rules don't take effect until July 2010 (oh c'mon.... surely the credit card industry doesn't need quite that much lead time) and only partially address the deceptive practices and predatory policies of the companies.

The rules were approved by the Federal Reserve, the Treasury Department's Office of Thrift Supervision and the National Credit Union Administration. "The revised rules represent the most comprehensive and sweeping reforms ever adopted by the (Federal Reserve) for credit card accounts," Fed Chairman Ben Bernanke. "These protections will allow consumers to access credit on terms that are fair and more easily understood."  Most sweeping reforms ever?  Well, yeah, considering there were virtually no controls on the credit card behemoths before this limited action was taken.

The new rules prohibit:

• Placing unfair time constraints on payments. A payment could not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay.

• Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account and unfairly computing balances in a computing tactic known as double-cycle billing.

• Unfairly adding security deposits and fees for issuing credit or making it available.  

Also, under the new rules, credit card lenders will be required to apply any payment above the minimum to the part of the balance with the highest interest rate and consumers will have to be given 45 days notice before any changes are made to the terms of an account, including slapping on a higher penalty rate for missing payments or paying bills late. Under current rules, companies in most cases give 15 days notice before making certain changes to the terms of an account.

Sen. Carl Levin, (D-Mich.), said the new rules "are a good first step, but they don't prevent a number of unfair, deceptive and predatory practices that saddle many ." Levin and Sen. Chris Dodd (D-Conn.) have introduced more stringent legislation to further crack down on the run-amok credit card industry.  Hey Congress, get on it!