In another move to curb credit card companies’ fee-o-rama, effective August 22, 2010, consumers will no longer have to deal with late fees exceeding over $25.
Here are some details of the new rules from the Federal Reserve that supplements the Credit Card Act:
- Most late payment fees will be capped at $25, though there are a few incidents where the fees can be as high as $35, if one of your last six payments was late, or if the credit card issuer can prove the costs incurred justify a higher fee.
- Any penalty fees will not be able to exceed the charge they’re related to. So you can’t be charged a $39 late fee when the minimum monthly payment was only $20. (Hurrah!)
- Multiple penalty fees for a single late payment are now banned.
- Account inactivity fees are also gone the way of the dinosaurs.
- Banks are required to give an advance 45 days notice on any interest rate increase and clearly state the reasons for the increase.
- Banks are now also required to review any interest rate increase every six months, and if appropriate, they must reduce your rate within 45 days after completing the evaluation. If the reasons for increase no longer exist (e.g., frequent late payment), then the fees should be reduced.