Whether due to the economy or the impending regulation enacted within the Credit CARD Act of 2009, credit card companies are taking the opportunity to raise interest rates and minimum payments. This is perhaps an unintended consequence of increasing regulation. These changes affect consumers with manageable debt, but others who are trying to get out of debt or living paycheck-to-paycheck are harder hit by these changes.
Issuers’ actions come as a growing number of consumers lose their jobs and default in record numbers on their credit card debt. The industry is also preparing for restrictions to take effect in February 2010… The banking industry says Congress has no one to blame but itself for higher rates and fees because banks had predicted that restrictions on pricing would lead to higher costs for everyone…
Yet some critics say that issuers are taking advantage of a loophole in the law to bolster their financial conditions… In a statement Monday, [Senator Charles] Schumer slammed issuers for trying to “wring more dollars out of their customers.” Some of the changes in card terms, Schumer says, are “against the spirit of the law and … just plain wrong.”
Is credit card reform — the Credit CARD Act of 2009 (Credit Cardholders’ Bill of Rights) — a mistake or are issuers just using the fear of losing future profits as an excuse for bilking customers now?
Consumers hit again as some banks raise credit rates, fees, Kathy Chu, USA Today, June 30, 2009
Published or updated July 1, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
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{ 8 comments… read them below or add one }
Who didn’t see this coming?! Seriously. Lenders mitigate the risk of default via interest rates and fees. The new law limits disincentives for defaulting, increasing the lender’s risk. Lenders’ rates and fees must increase to maintain the balance.
At least we got one good thing out of the Credit CARD Act of 2009: legal guns in national parks and wildlife refuges.
The easiest way to stop these people. Is to stop using there services completely!
Take your money out of these PONZI SCAMMING BANKS Communist Corperations. And put into Credit Unions that are owned by the people, who have their money in them. That are still highly Federally Regulated. Bank Ceo steal all the money in the banks. Then blame it on YOU! You can’t do this in a Credit Union that is owned by you! For the benefit of the people who all who own it?
BANKERS HATE CREDIT UNIONS. This is why. They don’t steal depositors fund and pay them selves big bonus for doing so.
Stop scamming yourself take your money out of banks… who are still screwing you!
At least one analyst firm says that they’ll remain lucrative regardless of the new rules.
http://www.reuters.com/article/rbssConsumerFinancialServices/idUSBNG45163920090629
“Bilked”? I’m sorry, but was someone conned out of money that belonged to them?
Through increased minimum payment requirements and higher interest rates? Perhaps. I’m sure some people will feel that is an appropriate term.
You prompted me to look up the definition of bilk. Here’s an example in a sentence: Congres bilked (1) the credit card market, and now issuers have to raise fees on everyone to make up for the customers who bilk (2b) them.
Of course it was a mistake. Any time you get the government involved in the market, it will lead to behavior none of the 535 Congressmen and Senators thought about. Now they are angry because they didn’t think? Too bad they never acknowledge that they are the cause of the change in behavior.
I don’t know what to do, my husband received a letter today saying BOA is changing our fixed rate personal loan to variable. He called to opt out and was told he couldn’t. The rep said he could close the account only if he paid it off! This can’t be legal, please help.