Fed rules protect credit-card customers

Associated Press

WASHINGTON

The Federal Reserve adopted new rules Tuesday aimed at protecting credit-card customers from getting socked by lofty late-payment charges and other penalty fees.

The rules respond to public and congressional outrage over practices by credit-card companies.

They bar credit-card companies from charging a penalty fee of more than $25 for paying a bill late. They prohibit credit-card companies from charging penalty fees that are higher than the dollar amount associated with the customer’s violation. They also ban so-called “inactivity” fees when customers don’t use the account to make new purchases, and they prevent multiple penalty fees on a single late payment.

The rules take effect Aug. 22.

In addition, the rules require companies to reconsider interest rates imposed on customers since the start of last year.

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