Update to original post --

Link to text of OTS/Fed/NCUA proposal.

Link to new WSJ coverage.

Item of most interest to me personally is the application of payments, i.e., new rule would require amounts in excess of min. pmt. to be applied to either the HIGHEST rate balance, or split equally amongst all balances.

Other provisions include curbs on universal default and risk-based repricing of existing balances.

I don't think regulation is necessary. At the most, it should make lenders disclose these terms in a more prominent way rather than be in the T&C. Not that it would be really useful for me, but it might be useful for others.

"For example, if a borrower was given a 10% interest rate when he or she had a credit score of 750, regulators would propose making it harder for banks to unilaterally raise the rate if the customer's credit score fell to 650."
It just makes it harder for well qualified borrowers to get that good rate in the first place. CLs may also be limited.

" If a borrower has a $500 balance at an introductory rate of 0% and another $500 balance at 10%, the lender would be prohibited from allocating payments only to the 0% balance first."
Say goodbye to lifetime x% offers!

" new rule would require amounts in excess of min. pmt. to be applied to either the HIGHEST rate balance, or split equally amongst all balances."
see above.

Basically, I think these are very bad regulations. If the banks are overextending themselves, let them learn by taking losses.

chocula said:If the banks are overextending themselves, let them learn by taking losses.

The protections are for the customers, not the banks.

Since it will be time for another AOR in the next 6 months or so, I hope these rules go away. I am worried about my 0% offers.

Are those Sleestacks? What a blast from the past.

If anyone would like to have their voice heard by the regulators, the Federal Reserve Board has requested public comments on the proposals.

Text

no matter what the fed regulates the businesses that lend money will simply make money.

simple as raising BT rates and APR for purchases. keep it up feds, we'll all be back to 19% like the 80's.

Yoksel said:"Hidden" fees are usually described in the papers that come with a credit card. It looks like because some people are mad of the fact they can't or don't bother to read, regulators want to cut bank's profits by new laws thus possibly cutting in part some good incentives banks propose e.g. Cash Back, miles, etc.

LOL. Even if you read the terms, they are intentionally confusing. Give me 3 hours with your average CC agreement, and I bet when done I still probably couldn't tell you what would trigger a fee, when, and what type. In AOR's I see all sort of confusing things, like there being no fee for BT's but a fee for cash advances, but certain checks classified as BT checks and others as convenience checks, and convenience checks get the BT rate (even though they aren't BT checks), but only if not made out to your name (in which case they get the cash advance rate). And then when you get the checks, they go on and on about how you can use the checks to transfer a balance, but are very careful to avoid outright calling them balance transfer checks. I can easily see how the average person can easily get confused, especially with 15 pages of equally confusing terms.

More government regulation is not the answer. Whatever more restrictions the government imposes upon the CC issuers, it'll be transferred straight to the consumers in the form of less CashBack / 0% offers and higher APRs, hurting more people in the long run. The market must be left alone to sort out these matters, especially in difficult times.

weghio said:More government regulation is not the answer. Whatever more restrictions the government imposes upon the CC issuers, it'll be transferred straight to the consumers in the form of less CashBack / 0% offers and higher APRs, hurting more people in the long run. The market must be left alone to sort out these matters, especially in difficult times.

You could probably say the same thing about workplace safety. The industry would sort it out...except it didn't. Yeah, I'd say stuff like OSHA probably has gone a bit overboard, but that's what you get when you don't respond. Likewise, I think the government has made it clear on a number of occasions that they were less than pleased with the credit practices, but the industry proves again and again they have no incentive to change, so they'll do as little as possible. The only avenue left is for the government to establish a mark for the least possible they can do.

Yes, I'll be disappointed if 0% money dries up, but honestly, not that disappointed. I have to believe I'd still benefit in other ways. There is that saying about a rising tide lifting all boats.

Edit:
Also, the bit about "less CashBack / 0% offers and higher APRs, hurting more people in the long run"? I have to believe that is completely backwards. Hurting some people, sure? But hurting more people? Thats absolutely silly and counterintuitive (unless you believe the cards are offering those things out of pure generosity). They offer those features because it makes them more money than it costs them, and that money comes right from their customers.