The Fed looks at credit card companies' unfair, deceptive practices - WDRB 41 Louisville News

The Fed looks at credit card companies' unfair, deceptive practices

Stocks pulled out of their lows and turned mixed after a tumble in oil prices linked to concerns about weak consumer spending.

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Once you take inflation into account, consumer spending fell in June as shoppers were hit with the biggest increase in prices in nearly three decades.  Consumer spending dipped by .2% during June.

The higher prices reflected a big surge in gasoline costs and helped drive inflation tied to consumer spending to its biggest increase since February 1981.

The surge in inflation was partially caused by the billions of dollars in stimulus payments that were delivered during the month.

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Louisville-based Humana is reporting a slight drop in its second-quarter profit.  It blames a double digit decline in premiums from its medicare prescription drug plans.

But Humana still outperformed Wall Street expectations.  The company also announced today that it's agreed to buy Cariten Healthcare, a regional health insurer in Tennessee.

The $245 million cash deal is expected to close in the fourth quarter of this year, but isn't expected to affect its earnings this year.

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A Louisville plant that produces packaging products has been sold for $6 billion.

International Paper now owns the Weyerhaeuser containerboard, packaging, and recycling business.  The plant employees about 100 people.

Monday new signs were unveiled, and over the next two weeks employees will take part in several activities to acknowledge the change in ownership.

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For the first time in history, consumers have a chance to stop alleged unfair and deceptive credit card practices.  But time is running out.

The Fed has always had the authority to ban unfair and deceptive practices, but it's never used that power against credit card companies -- until now.

The central bank has issued some proposed rules, and Monday was the deadline for people to comment on them.  As Lauren Saunders of the National Consumer Law Center explains, "They have proposed that credit card companies shouldn't be able to increase your interest rate on purchases you've already made unless you are thirty days late on your payment.  If you make you payments on time, you shouldn't get hit with an interest rate hike."

The Fed is also proposing giving people more time to make payments, and stopping unfair teaser rate promotions that can be manipulated.  Saunders says, "The tricks and the traps that the credit card companies use, even for people who are trying to pay their bills and are paying them on time, they get hit with all sorts of unfair interest rate hikes and unfair fees.  It's getting hard to put bread on the table."

Congress is also considering legislation on credit card practices.  Although it may not pass this year, experts say working on the issue in Congress is vital.

Saunders says, "The rules will be stronger if they're in legislation, than if they're simply rules of the Fed.  Either way they can protect Americans, but Congress needs to send the Fed a signal too, to hold strong, and don't succumb to the lobbying of the banking industry."

The banking industry argues the new rules will result in higher interest costs for all consumers, reduced access to credit for people with an imperfect or limited credit history, and less access to low credit options.

After consumers chime in, you can expect the Fed to issue the new rules by the end of the year.

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