Clark Howard's Tips

May 7, 2008

The Federal Reserve is proposing new guidelines for the credit card industry. These are simply proposed regulations; they haven't been finalized yet and may not be until after the November elections. The banks, predictably, are going berserk trying to push back on these proposals.

Here are some highlights of what's being considered: -- Banks would be required to give you a minimum of 21 days to pay a bill. That means statements would have to go out in a timely manner. Banks could no longer pull that funny business of sending out your statement a day or so before it's due.

-- Credit card companies would no longer be allowed to raise rates on existing balances. -- Holds would no longer count toward your limit. This tactic is frequently used to force you over your limit. Holds are placed on your account when you use your card at a hotel, car rental counter or gas pump. -- Double-cycle billing -- often used to charge interest on a statement that's already been paid in full -- will be banned. Keep in mind that these are only proposals. The aim is to make it look like there's a cop on the beat during an election year. These may be changed completely before they become the law of the land.

One thing is certain -- you can expect an uphill battle! Here's an example of the mentality coming from the banks: Capital One was recently investigated by California's state attorney general for its practices concerning customers. The company decided to change its registration from a state bank to a national one during the inquiry. That exempted them from the attorney general's scrutiny and allowed them to turn around and file a counter suit!

So what's the takeaway for you? Seize the power by not carrying a revolving balance on your credit card. Stop accumulating lifestyle debt and the banks will have no power over you.

Consumer advice courtesy of