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Balance transfer credit cards now get better consumer protection

[Saturday, May 7th, 2011]

A new set of rules and regulations were approved by the Federal Reserve recently. These rules are targeted towards closing the loopholes left ignored by the CARD Act that came into effect in two phases in 2009 and 2010. Despite the CARD Act coming into play, consumers still felt cheated out in certain aspects because of the loopholes left behind. The primary cause for concern amongst customers was the fact that most lenders revoked the promotional offer much before it was due to expire.

One of the recently approved rules stipulates that credit card lenders cannot revoke the promotional offer on the credit card until it expires. The only exception to this is if the customer fails to make his payments for 2 months in a row. This implies that if any lender offers the promotional interest rate of 0% on balance transfers for 21 months, they cannot go back on their word before the tenure ends.

Another recently approved regulation states that credit card lenders cannot consider the income of the entire household before approving the request for a credit card. They have to only take into the consideration the income of the applicant while either approving or rejecting the application. The third regulation stipulates that the fees for the first year on the credit cards cannot exceed 25% of the total limit on the card. This includes all fees charged to the customer before and after approving the card.

These new set of rules are all set to come into effect from the 1st of October, 2011.

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