The FTC Act

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If you’ve ever been nailed by a credit card late-payment fee, had your interest rate raised unfairly, or otherwise suffered at the hand of your credit card company, relief may be in store… provided new rules proposed by the Federal Trade Commission are enacted.

Five major protections offered by the FTC Act

  1. Banks would be prohibited from increasing the rate on a pre-existing credit card balance (except under limited circumstances) and must allow the consumer to pay off that balance over a reasonable period of time.
  2. Banks would be prohibited from applying payments in excess of the minimum in a manner that maximizes interest charges.
  3. Banks would be required to give consumers the full benefit of discounted promotional rates on credit cards by applying payments in excess of the minimum to any higher-rate balances first, and by providing a grace period for purchases where the consumer is otherwise eligible.
  4. Banks would be prohibited from imposing interest charges using the “two-cycle” method, which computes interest on balances on days in billing cycles preceding the most recent billing cycle.
  5. Banks would be required to provide consumers a reasonable amount of time to make payments.

In short, these changes are good for the consumer but bad for the credit card companies, and as such, credit card companies are lobbying heavily for these rules not to be enacted. If you’d like to see these proposed changes become permanent, you can write to: Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 20551.

If you’re feeling slightly more adventurous, you can call the FTC at (202) 326-2222, try e-mailing them at [email protected] or use the e-mail form at, selecting “Consumer Protection” as your message’s category. In fact, the FTC’s entire organizational directory can be downloaded from, so if you really want credit card changes, you could always call everyone.

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