The Federal Reserve recently proposed three new changes to consumer protection laws that will make it more difficult for lenders to circumvent the spirit if not the letter of the Credit CARD Act, according to a report from The Associated Press. The new changes will go into effect on October 1.
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For example, credit card lenders will no longer be allowed to ask consumers for their household income on applications, the report said. The Federal Reserve believes this practice does not necessarily reflect an applicant’s personal financial standing, and now requires lenders to consider consumers’ personal income only.
In addition, the Federal Reserve also clarified a rule stating that fees charged for use of a credit card in the first year it’s opened should be put toward the existing cap, which cannot exceed 25 percent of the credit line, the report said. The final rule extends a protection related to promotional rate changes to waivers for interest charges as well.
[Consumer Guide: How the Credit CARD Act of 2009 Affects You]
The Federal Reserve Board has made a number of tweaks to the Credit CARD Act since it was passed in 2009 because many lenders have been trying to find ways around some of the specific wording in the law.