A new Federal Reserve rule will protect credit card holders taking part in promotional programs that waive interest charges for a certain period of time.
As far as I can tell, this will apply to credit card balance transfers, such was 0% balance transfer credit cards and others that allow card holders to avoid paying finance charges for a specified time period.
The Fed announced this week on its website that such programs will be afforded the same Credit Card Act protections as promotional programs that apply a reduced rate for a specified period of time.
For example, a credit card issuer that offers to waive interest charges for 12 months will be prohibited from revoking the waiver and charging interest during the 12-month period, unless the account becomes more than 60 days delinquent.
Typically, balance transfers have conditions in place that say the promotional rate, such as 0% APR, will be rescinded if the card holder doesn’t make on-time payments.
So if you were to miss just one payment, the card issuer could revoke your 0% APR and slap you with the default rate, which may be 20% or higher.
That would certainly make it very difficult to pay off credit card debt, which is the main purpose of a balance transfer.
This new rule gives card holders a little more leeway so they won’t automatically be punished for missing a single payment.