WREN Report: Fed Proposes New Credit Card Rules

May 4, 2008  by in UnCategorized   

By Home Furnishings Business in on May 2008 • The U.S. Federal Reserve Board has proposed new rules to prohibit unfair practices regarding credit cards and overdraft services that would, among other provisions, protect consumers from unexpected increases in the interest rate charged on preexisting credit card balances. The proposal addresses consumer complaints on a number of credit issues and, if adopted, should make it easier for consumers to better understand credit and how to use it wisely.

The rules, proposed for public comment, also would forbid banks from imposing interest charges using the “two-cycle” billing method, would require that consumers receive a reasonable amount of time to make their credit card payments, and also would ban the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers who use overdraft services offered by their bank.

The proposed rules also prohibit banks from imposing a fee when the credit limit is exceeded solely because a hold was placed on available credit. These “holds” on credit and similar holds on debit cards, also to be prohibited, can occur when the final dollar amount of a transaction was not known in advance (for instance, when a consumer checks into a hotel, a hold is placed for the expected cost of the stay).

• The U.S. overall unemployment rate declined slightly in April, to 5 percent from 5.1 percent in March, according to the U.S. Bureau of Labor Statistics (BLS). BLS attributed the decline to job losses in construction, manufacturing and retail trade, partially offset by job gains in health care and in professional and technical services.

In the home furnishings industry, employment dipped 0.1 percent from March to April in furniture and home furnishings stores, while manufacturing jobs in the furnishings industry declined 0.8 percent, month-over-month.

Compared with April 2007, home furnishings store employment was off 2 percent and the number of home furnishings manufacturing jobs fell 5.9 percent.

• On the gasoline front, the average retail price per gallon of unleaded was off three-tenths of a cent at the end of the first week of May, measured against day-earlier prices, according to AAA’s Daily Fuel Gauge Report. Compared with last month, retail prices increased 9.4 percent per gallon and jumped 19.4 percent against May 2007 prices.

Weekly Review of Economic News (WREN) reports are summaries of recently-released economic statistical data that affect the home furnishings industry. WREN reports are compiled by HFB Research Editor Janice Chamberlain.