By Truman Lewis
ConsumerAffairs.com
October 27, 2009
Sen. Christopher Dodd (D-Conn.) has introduced a measure that would immediately freeze credit card interest rates, as Congress continues trying to rein in the financial services sector.
Dodd, who heads the Senate Banking Committee, said credit card companies are using the delayed implementation of legislation passed earlier this year to jack up fees and interest rates.
We worked long and hard to enact the safeguards included in the Credit CARD Act, said Dodd, who had introduced the bill in 2004, 2005 and 2008 before successfully passing it this spring. And no sooner had it been signed into law, but credit card companies were looking for ways to get around the protections this Congress and the American people demanded.
"At a time when families are struggling to make ends meet, jacked up rates can quickly create crushing debt. People need to be responsible with their money, but they shouldnt be taken to the cleaners by outrageous rates, Dodd said.
The Credit CARD Act requires 45-day notification of interest rate increases, and lengthens from 14 days to 21 days the amount of time before the due date that a statement must be delivered, but it does not become fully effective until Feb. 1, 2010.
In April, Dodd and Sen. Charles Schumer (D-N.Y.) sent a letter to the heads of the Federal Reserve, OTS, and NCUA calling on them to implement an emergency freeze on interest rates tied to existing balance on credit cards.
In the House, Reps. Carolyn Maloney (D-N.Y.) and Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, have pushed to speed up implementation of the CARD measure to December 1, 2009, two months ahead of schedule.
When it finally takes effect, the CARD Act will require credit card companies to review every account that has seen an interest rate increase since January 1, 2009 and reduce rates where warranted.
Dodd sent a letter to the Chairman of the Federal Reserve and the heads of key regulatory agencies in July directing them to let credit card companies know that they will be held accountable for rate increases. He also called on the Federal Reserve to provide clear, robust requirements for the reviews and called on the agencies enforcing those regulations to hold the credit card companies strictly accountable for conducting thorough reviews and decreasing rates.
