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Card holders are now paying fewer penalty fees say US regulators

Thursday, March 31, 2011

The rates hikes are now more infrequent and card holders are paying fewer penalty fees after the changes that were brought in by the US Congress on card issuers. This has been reported after reports of a survey were released by the US regulators.

This crackdown on the card issuers was long pending and was pushed through by the Congress and later signed into a law by the Obama administration in 2009. This was a result of a whole lot of criticism that the issuers were not being transparent with the charges that were being imposed on customers and this was causing a lot of issues for the customers in terms of late fees as well as rate hikes that were not clearly mentioned in the card terms.

The law actually became effective only in February 2010 and the Obama administration is likely to hold a conference with industry leaders as well as consumer groups on Tuesday to mark the first anniversary.

Obama’s top adviser, Elizabeth Warren has credited banks and other financial institutions with going beyond the requirements as per the law in some cases while also issuing a warning stating that the regulators will continue to crack the whip if necessary.

Warren was of the opinion that breaking rules constantly was a costly affair and that must be avoided. Warren’s consumer team has also claimed that as per their research consumers seem to understand the terms (credit card) better now. However, a significant amount of confusion still remained.