The extensive legislative reforms enacted the previous year were aimed at protecting consumers from the deceptive practices of the credit card industry.  However, many credit card issuers were able to immediately find ways the side step such regulations.  As a result, the Federal Reserve has moved to clarify such ambiguity in the credit card rules that allow these companies to elude the regulations.  The Federal Reserve approved such amendments Friday and the changes are expected to go into effect on October 1.  

Some of the expected changes from the Federal Reserve are listed below. 

Original Rule:  Card issuers must consider an applicant’s ability to repay debt before approving new or higher credit lines.

Amended Rule:  Banks cannot request “household income” on card applications to assess a consumer’s ability to pay. The Fed says the term is too vague and doesn’t accurately reflect the applicant’s financial standing. Instead, issuers must consider the applicant’s individual income or salary. 

Original Rule:  fees charged in the first year of the account are capped at 25% of the credit line. After that, there is no cap on fees.

Amended Rule:  Any application fee or other charges a consumer is required to pay before an account is opened counts toward the limit on first-year fees. 

Original Rule:  Card issuers cannot hike or revoke promotional interest rates.

Amended Rule:  The same rule applies to the waiver of interest charges. For example, a card issuer may now promise a promotional waiver for 70% of interest charges during an introductory period. The Fed says such waivers can’t be revoked unless the account becomes more than 60 days delinquent.