Is Someone Finally Going to Put Credit Card Companies In Their Place
Changes to Regulation Z May Take the Credit Card World By Storm
I've said it once and I'll say it again -- someone's got to do something about the way the credit card industry currently works. It looks like upcoming changes to Regulation Z may do just that. But what is Regulation Z and how is it going to put a stop to harmful credit card practices? Read on...
What is Regulation Z?
The Federal Reserve Board oversees a law called the Truth In Lending Act. This law states what lenders can and can't do and what they must disclose to borrowers. Regulation Z of this Act is the part that deals with credit cards and the way it stands right now allows credit card companies to take advantage of credit card holders without repercussion.
What's Going to Change?
If some members of government have their way, credit card companies aren't going to be able to play their nasty little games anymore. Instead of only requiring 15 days notice to change the interest rate of a fixed-rate card, the new rules would require 45 days. That's a whole extra month for a credit card holder to change credit cards if the new terms didn't suit them.
More changes that are on the table include making credit card terms more readable. Right now they are written at a 12th grade reading level. Many want to see that level brought down to 6th or 8th grade so all credit card holders can easily understand what they are signing up for.
What More Needs to Be Done?
While we're taking a step in the right direction, more needs to be done about the credit card industry. Many would like to see a stop put to excessive fees that make up more than 25 percent of a card holder's total credit limit. Others would like to see the universal default policy completely done away with.
While the proposed changes are a step in the right direction, more changes are needed if credit cards are really going to work for the general population instead of taking advantage of them.