New credit card changes helpful but key interest rate cap not included


A long overdue bill regarding credit card fees was passed on Tuesday by the Senate and is expected to be signed by President Obama.

Here are some of the bill's key provisions:

  • Starting in 2010 charging consumers who pay by phone would be banned.
  • Sudden surges in interest rates would also be banned.
  • For consumers, it would clarify the cost of big ticket items by forcing consumers to recognize how much they are paying in interest.
  • Card companies would also have to provide information on consumer counseling and debt management.
  • Consumers would not face retroactive interest rate increases unless payments are 60 days overdue.
  • Even after 60 days, the consumer can get his old rate back by making on time payments for six months.
  • Double cycle billing is also banned. Under the present rules consumers who are late can be assessed interest on a prior month's balance.
  • Issuers must send bills 21 days before the due date and provide 45 days notice before changing the terms on a card.
  • The new rules still allow card companies to raise interest rates on consumer's future charges.

While the bill is helpful, it failed to attack the main problem -- interest rate charges. Lobbyists must have leaned on Senate members because a provision to limit interest rates to 15% failed to gain support.

So, where are we? Yes, the changes are helpful but they did not get at the heart of the problem -- the interest rate charges. Sad to say that banks still have an open ticket to charge whatever interest rated they choose.

Do you think banks will raise credit card interest rates before the 2010 deadline?

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