New credit card laws to be investigated
The House of Representatives Economics Committee announced this week that it will conduct an inquiry into the Government’s planned changes to legislation covering credit cards.
In March, the Treasurer released an exposure draft of the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011, which introduces a requirement for lenders to provide a key facts sheet with home loan and credit card contracts.
It also contains provisions that regulate the approval of spending on credit cards above the credit limit; restricts issuers from making unsolicited invitations to increase credit limits, and specifies an allocation hierarchy for payments, so that credit advanced on higher rates is repaid first.
The most controversial aspect of the bill relates to use of cards above the credit limit. A credit provider will be allowed to approve purchases that would result in the credit limit being exceeded, but this buffer will be limited to a 10 per cent default.
Credit providers must not impose fees or charges, or a higher rate of interest, on the consumer as a result of the card exceeding its limit.
Source: Banking Day