Fed puts kibosh on rate shenanigans

credit cards
credit cards

The Federal Reserve just issued more than 1,100 pages of clarifications about the the Credit CARD Act, which goes into effect next month. A handful of the clarifications revolve around sneaky interest-rate tricks in which the banks currently engage. Fortunately, many of the Fed's notes clarify things in favor of the consumer. This CNN/Money article touches on some of the big ways you'll be affected by the CARD Act when it comes to interest rates.

The CARD Act strictly limits the circumstances under which credit card companies can raise your interest rate on existing balances on fixed-rate cards. The rules are a little looser on variable-rate cards, which a lot of issuers have been strong-arming consumers into accepting. They've been doing this by basically saying, "Take this variable-rate card, or we're going to skyrocket the interest on your fixed-rate card." When faced with these alternatives, it's no wonder many people took the variable-rate option. Variable rates would be especially good in theory right now, except that banks have cooked up yet another (also soon-to-be-outlawed) catch to make more from them.