As you may imagine, a bankruptcy specialist like me does a lot of preaching about credit card abuse. It’s all too easy for people to overuse their credit cards and get into hot water that they later find very difficult to get out of. Then, when an unforeseen challenge arises (divorce, job loss, and medical expenses are the three that come up most often in conversation with my bankruptcy clients), people have very little “wiggle room” to use credit to work out of their dilemma.

But, same as in a divorce case, where the marital problems are very rarely all the fault of just one party, credit card companies haven’t always been exemplary in their dealings with customers, either. Just two weeks ago, the Federal Reserve began taking steps to end “unfair and deceptive” credit card industry practices. The proposed regulations could go into effect by the end of this year. The banking industry, not surprisingly, is opposed to the changes, saying those changes could lead to higher interest rates on credit cards.

Here are a few of the items being proposed:
1. A payment would not be called late unless the borrower is given 21 days to
2. If a card has different interest rates (sometimes a special offer will have a lower
than the general rate on a card), repayments cannot all be credited to the lower
rate portion.
3. Interest rates could not be raised retroactively on existing balances.
4. Credit card companies could not add fees simply for making credit available.

And here’s one proposal that I really like: No more “double-cycle billing” (meaning charging interest on the average outstanding balance over more than one billing cycle). An example of this would be a client with a $2000 credit card balance who pays off $1000 at the end of the first billing cycle, yet who is charged interest for the second month on a balance of $1500, because that is the average balance for the two months!

I imagine that by the time these proposals become law, the changes will come too late to provide any help for many of the people I’ll be counseling in my four law offices around the state of Indiana. But, again, just as in a marriage, it’s going to take changes on both sides (the users of the cards and the lenders offering them) to make credit cards really work for everyone’s benefit, and these legislative proposals are a good start.