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The initial reaction on the proposal was mixed. Nick Bourke, author of a study for The Pew Charitable Trusts Safe Credit Card Project that is quoted in the Fed proposal, praised most of the fee limits. But he questioned whether the Fed was meeting the "reasonable and proportional" standard set by Congress in the law in certain cases. For instance, a bank would still be able to charge a $39 late payment fee on a $70 payment that's past due
-- the average for a balance of around $2,500. That fee would equal roughly 60 percent of the payment. "The Fed doesn't say anything about whether that's reasonable and proportional," Bourke said. He also noted the Fed wouldn't require interest rate increase reviews to consider the same factors that led to the hikes in the first place. And he pointed out there is no limit in the proposal to how much a bank could increase an interest rate. In the past nine months, millions of card holders saw increases that doubled or tripled their interest rates. Pew seeks a limit of a 7 percent hike in any given increase. The Fed will accept public comments on the proposal for a month before finalizing the rules. The full text of the rules can be found on the regulator's Web site at
http://www.federalreserve.gov/.
[Associated
Press;
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