The Federal Reserve on Wednesday proposed another new rule to strengthen consumer protections against abusive practices by credit card issuers, including limiting penalty fees and requiring them to reconsider past interest rate hikes.
The proposed rule, which comes just days after a new credit card protection law took effect, would prohibit card issuers from charging late payment fees or other penalty charges that exceed the amount of a consumer's excess of the account terms.
For example, card issuers would be banned from charging a $39 fee when the card holder is late in making a $20 minimum payment. In such a case, the late fee would be limited to $20, paid in addition to the minimum payment.
"The rule would prevent credit card issuers from charging large penalty fees for small missteps by consumers and would require issuers to re-evaluate rate increases imposed since the beginning of last year," Federal Reserve Governor Elizabeth Duke said in a statement.
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