Fallout: The Financial Crisis

Fed looks into credit card changes

Nancy Marshall-Genzer Aug 4, 2008
HTML EMBED:
COPY
Fallout: The Financial Crisis

Fed looks into credit card changes

Nancy Marshall-Genzer Aug 4, 2008
HTML EMBED:
COPY

TEXT OF STORY

Scott Jagow: Another thing the Fed’s been up to is looking at credit cards. It wants to impose some new rules on credit card companies, and today’s the last day for public comment on those rules. Nancy Marshall Genzer has more.


Nancy Marshall Genzer: If you’re like me, you receive a lot of promotional offers for credit cards. Many of them come with low introductory interest rates. But those rates could adjust higher. And for card holders who don’t pay off their balances each month, banks have a lot of discretion on how to apply payments.

If you pay slightly more than the minimum, banks can apply the extra money — surprise – to the portion of the balance at the lower rates. That means a fatter balance at a higher rate. That’s just one thing the new rules would change. You would also have more time to pay your bill.

Moody’s Economy.com chief economist Mark Zandi likes the Fed’s proposal:

Mark Zandi: It’s often times a mystery to us how we get charged the interest rates that we do and the fees that we have to pay, and this is an effort to make that all clearer to us.

Lenders don’t like the Fed’s rules. They say they’re still hurting from the subprime crisis. But Zandi says lenders should quit while they’re ahead, because Congress is considering more draconian legislation.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.