Federal Reserve clamps down on credit card industry
The US Federal Reserve announced some of the most sweeping changes to credit card company rules in its history on Thursday, clamping down on "unfair or deceptive" practices and giving consumers more time to pay off their debts, dpa reported.
The changes, which were approved by the US central bank's governing board and two other government agencies, come after months of public discussion and will only take effect in January 2010.
US consumers have been turning to credit cards as loans for everything from cars to houses to tuition haVE become hard to come by in the financial crisis.
US politicians have criticized government regulators for failing to stop credit card companies from taking advantage. New legislation was being planned for 2009 regardless of the Fed's action.
Among other things, the new rules prevent companies from raising interest rates on existing debt and require a "reasonable" amount of time for consumers to reduce their outstanding balances.
The Fed has been conducting focus groups to test the changes and more than 60,000 customers have submitted comments.
"The revised rules represent the most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts," Fed Chairman Ben Bernanke said in a statement.
"These protections will allow consumers to access credit on terms that are fair and more easily understood," he said.