The Federal Reserve and two other banking regulators are set to unveil today one of the most aggressive efforts in decades to crack down on the credit card industry, prohibiting practices such as arbitrarily raising interest rates on outstanding balances.
The proposed regulations, which could be finalized by year’s end, would label as “unfair or deceptive” practices that consumers have long complained about. That includes charging interest on debt that has been repaid and assessing late fees when consumers are not given a reasonable amount of time to make a payment. When different interest rates apply to different balances on one card, companies would be prohibited from applying a payment first to the balance with the lowest rate.
Before, all the Fed made the credit card companies do was to inform the consumer of such practices. Now, the Fed will forbid them.
Even if you bemoan government interference into businesses and the economy, isn’t this a good idea? Isn’t there a moral issue here that the state does have a Romans 13 right to restrict, namely that all-but-forgotten sin of usury?