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Commentary: Credit card industry's abusive tactics must end

This editorial appeared in The Miami Herald.

Near the end of 2008, the Federal Reserve Board adopted new rules that would end some of the worst abuses by credit-card issuers. These rules, 18 months in the making, would put an end to such practices as hiking interest rates on customers who have never made a late payment and kept their accounts current, as well as the practice of increasing interest rates on money already borrowed. Trouble is, the rules won't take effect until July of next year.

The banned practices have victimized consumers for years. They unfairly remove untold amounts of money from households already squeezed to the limit by debt and add to the revenue of financial institutions often controlled by the same entities receiving billion of dollars in taxpayer bailouts.

One result is to hurt the credit standing of individuals who don't deserve bad treatment. One gimmick that the companies have relied on, for example, is to shorten the time between the arrival of the bill and the due date. Under the new rules, credit-card companies won't be able to charge a late fee if they mail bills to cardholders less than 21 days before payment is due. The rules also put an end to the practice called "universal default," whereby one issuer can jack up the interest rates if the consumer makes a late payment on any other credit account for any reason.

To read the complete editorial, visit The Miami Herald.