The Federal Reserve has issued a regulation in which it has allowed the imposition of cap on the fine that is being charged from the defaulters of credit card dues. The same has also been done for other problems as well.

A cap of $25 is there for the first-time offenders and $35 has been set up as the limit for frequent defaulters.

Till now the credit card companies were allowed to charge fines based on their whims and fancies.

The Fed had already issued regulations for the credit card segment, but the caps were not included in those. August 22 has been chosen as the date for the implementation of these rules.

Fed said that through these guidelines, it wants to strike a balance between protection of the customers and also stopping them from bad behavior. But it also added that if the card companies are able to prove that the cost of dealing with violations is high.

These regulations have come after the Congress asked it to come up with regulations for the market. Till now, the average rate of interest for credit card defaults was quite high.