Senators Call For Freeze On Credit Card Interest Rates
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Last year, the Federal Reserve announced new rules for credit card issuers that would rein in controversial practices like arbitrary rate increases on existing balances. Consumer advocates welcomed the news, but the regulations wouldn’t take effect until mid-2010. So members of the House and Senate introduced legislation that would essentially move up the start date for the Fed’s plans.
That’s still not fast enough for some. Hearing it from their constituents, Democratic Sens. Charles Schumer (N.Y.) and Chris Dodd (Conn.) asked the Federal Reserve on Thursday to hurry up and stop arbitrary rate increases immediately.
“Credit card providers have been aggressively raising rates on consumers now to avoid the ramifications of this rule when it goes into effect next year,” the senators wrote. “Companies have increased interest rates across the board now, to increase interest rates before the new rules go into effect.”
The senators say the people they represent have been getting soaked: “Consumers describe situations to our offices in which the interest rates on their accounts have doubled or tripled overnight, without any misconduct on their part.”
Public anger over credit card rates has reached the White House — on Thursday President Obama assembled CEOs to talk to them about their controversial practices. After the meeting, the president called credit cards “an important convenience for a lot of people…We think that’s important and so we want to preserve the credit card market… but we also want to do so in a way that eliminates a lot of the abuses and the problems that a lot of people are familiar with.”
Obama called out industry practices like enticing consumers with low interest “teaser rates,” hidden fees, and unclear contracts. He called for an end to “the days of any time, any place rate increases.” The president said his team would be working with Congress to make it happen.
White House spokesman Robert Gibbs said on Monday that the administration supports Rep. Carolyn Maloney’s (D-N.Y.) Credit Cardholder Bill of Rights, one of the bills that would advance the Fed’s new rules and codify them into law. A House committee approved the legislation on Wednesday.
Elected officials aren’t the only ones hearing from frustrated credit card holders.
