March 4, 2009

BRING BACK USURY LAWS:

It's time to hold credit card issuers to account: Customers who pay on time are being socked with usurious rates even as lenders are getting federal bailouts. Now Congress is moving to halt the industry's practice of raising rates at will. (David Lazarus, March 4, 2009, LA Times)

Mark Huba is one of numerous Capital One cardholders nationwide who pays his bills on time and hasn't missed any payments -- yet has just been notified that his interest rate is soaring to almost 18%.

Cap One's rate hikes are the latest example of how the credit card industry is turning the screws on customers even as many of those same lenders receive billions of dollars in taxpayer-funded bailouts.[...]

The Federal Reserve is attempting to curb runaway rate hikes by limiting lenders' ability to charge more for existing balances and requiring 45 days' notice for any changes to contract terms. However, the Fed's new rules don't take effect until July 2010 -- nearly a year and half from now.

Clearly help is needed for cardholders sooner rather than later. That's why Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, has introduced legislation that would immediately end the credit card industry's practice of raising rates at any time and for any reason.

At a committee hearing Tuesday, he called for "sweeping reform of abusive credit card and mortgage lending practices," and asked whether a new regulatory agency is needed to focus exclusively on protecting consumers from rapacious lenders.

My hunch is that most cardholders already know the answer to that question.

Posted by Orrin Judd at March 4, 2009 9:25 AM
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