Federal Reserve continues to tighten credit card payment regulations

New compliance standards have become trickier for EMV credit card providers, but are expected to draw more attention from consumers looking to make secure purchases.

The U.S. Federal Reserve released new regulations that tighten the restrictions on randomly raising interest rates for consumer credit cards. The announcement comes as much-needed relief for consumers. Prior to the new standards, credit card companies used low interest rates, or promotional offers such as zero interest for the first six months after card issuance, before discreetly driving interest rates up without notifying the consumer. As a result, credit card users would eventually face unexpectedly high payments and interest.

"They suck people in with these too-good-to-be-true offers and then someone pays one day late and they have to pay an exorbitant rate on a product they probably couldn't afford in the first place," Consumers Union staff attorney Lauren Bowne told the Dow Jones Newswires. "We definitely warn people to shy away from them."

With new regulations, consumers no longer need to worry about credit card offers. Credit card regulations have been in the spotlight since the onset of the economic recession. Once consumers began realizing certain unfair trends associated with credit card companies, lawmakers and government officials began targeting some of these techniques to prevent another economic collapse. The Credit Card Accountability Responsibility and Disclosure Act of 2009, also implemented by the Federal Reserve, was the first step to improve overall payment card standards throughout the country. The most recent development is a move by the Federal Reserve, which is common soon after legislation is passed, to patch any loopholes that may have lingered.

Specifically, the Federal Reserve wanted to keep credit card issuers from certain cases in which consumers are charged more than their actual spending limit.

"A card issuer that, for example, charges a $75 fee to apply for a credit card with a $400 credit limit generally would not be permitted to charge more than $25 in additional fees during the first year after account opening," the Federal Reserve explained in its announcement.

In fact, the Federal Reserve has recently implemented strict compliance standards for a number of other smart card payment solutions. The organization also announced new regulations for gift card payments that extend the life of the cards and allow stores to sell previously developed gift cards with modern laws applied to them.