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Federal Reserve Asked to Look into Credit Card Interest Rate Increases

Reuters ran a story last week that reported that Senate Banking Committee chairman Senator Chris Dodd (D-Connecticut) drafted a letter to Federal Reserve Chairman Ben Bernanke and other regulators requesting that they immediately put provisions in place that will help stem the tide of credit card companies raising interest rates on balances held by their cardholders.

Dodd said that he was disturbed by reports that credit card companies were arbitrarily raising interest rates on balances held by the cardholders, even if they paid on time and played by the rules. Credit card reform legislation that was recently drafted by Congress and signed into law by President Obama will outlaw this practice.

Now that is all well and good but unfortunately for consumers that currently carry balances, for some unknown reason these new laws won’t go into effect until February of 2010. Which begs the question, why did they not make these laws effective Immediately. The laws are designed to stop predatory practices by credit card issuers so how could the lawmakers not see this coming from a mile away?

They, in essence, gave the credit card companies a 9 month window of opportunity to do just about whatever the hell they wanted to do. The credit card issuers, who are already being squeezed for profits because of rising defaults, will be losing a great deal of money when these new laws go into effect because they will no longer be allowed to charge outrageous interest rates.

So how could the lawmakers not see that the credit card companies would make a mad dash for cash while it is still legal to do so by arbitrarily raising interest rates on account holders that carry balances? And now Dodd claims that he is disturbed to hear of this?

These are credit card companies we are talking about, not the Girl Scouts of America. As the chairman of the Senate Banking Committee shouldn’t he have had a pretty good idea that this would happen?

I sometimes wonder if these politicians are just incompetent or just plain stupid.

Related Information:

  1. How to Deal with Sudden Credit Card Interest Rate Increases If you are one of the millions of Americans who have recently seen your credit card interest rates increase sharply then you can at least take comfort in the fact…
  2. Credit Card Interest Rate Increases to Be Looked at by Regulators The feds are now taking a look at how credit card issuers are aggressively raising interest rates on existing balances….
  3. Credit Card Companies Could Be Hurting Themselves with Interest Rate Increases This certainly is an ironic twist but I can’t help but wondering if credit card companies are raising the interest rates on cardholders are actually hurting themselves in the process….
  4. 0 Interest Rate Credit Card – Are They Real? Get the facts before you apply for a 0 interest rate credit card. Make sure you know exactly what to look for. Don’t get burned. Read more here….