Senate votes to limit credit card rate changes

[Old Coot]

Source: Associated Press

WASHINGTON – The Senate voted on Tuesday to prohibit credit card companies from arbitrarily raising a person's interest rate and charging many of the exorbitant fees that have become customary — and crippling — to cash-strapped consumers.

The overwhelming bipartisan vote of 90-5 was lawmakers' way of telling Americans that they haven't been forgotten amid a recession that has left hundreds of thousands jobless or facing foreclosure.

With the House on track to endorse the measure by week's end, President Barack Obama could see a bill on his desk by the end of the week.

"We've got too many hard-working families in Massachusetts struggling to keep their heads above water, and the last thing they need is to get whacked with unfair credit card fees," said Sen. John Kerry, D-Mass.



Read more: http://news.yahoo.com/s/ap/us_congress_credit_cards

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The credit card companies have 9 months to continue fleecing the public.

[DJ13]

1. No, they can continue fleecing the public after this takes effect

They just need to be more creative about it.

Without interest rate caps this bill only slows them down, it doesnt stop them from raising rates far beyond the existing loan shark rates they've already imposed.

[Joe Chi Minh]

19. The Senate: House of Shame. The House of Shame. The House of Shame.

Far worse than Congress has ever been, by the sound of it. Monsters.

To some extent, it's always been the way of capitalism. But in the UK (not so much Scotland) and the US, it's become like fox-hunting, though the fox generally has more chance. The docile and hence non-productive hounds are shot by the hunt, while the "cleaned-out" poor human-beings are put out to die by inches on the street

[harun]

24. Damn right. If they voted 90-5 it means it does nothing to help consumers.

They need to cap interest rates, period.

[phantom power]

2. This is all bullshit kabuke. I want a universal prime+10 limit on interest rates.

Maybe even prime + 5.

[HowHasItComeToThis]

13. BRAVO CITIZEN

[harun]

25. Agree. Even if they want it prime + 15 then just put in the bill it goes down

one every year until it gets to prime + 5. At least that would be SOMETHING. This bill is a joke.

[regnaD kciN]

3. Big whoop...

This does nothing to help credit card holders. It doesn't roll back interest; it doesn't even prevent banks from raising interest rates at will -- it merely requires them to give 45 days notice.

And, for most of the provisions, all it does is move the implementation date from July of 2010 to March of 2010. Until then, it's open season. By the time this bill takes effect, every step it's designed to prevent will already have been implemented.

Ah, but Congress can brag about how they helped the "little guy." :eyes:

[depakid]

5. I agree- in many respects, this is worse than doing nothing at all and letting the issue seeth

then again- that's probably what close to half of the Democrats in congress intended.

A potempkin measure, designed to protect the credit card companies from outrage, while at the same time allowing the US media to crow about "how good the relief will be for ordinary Americans."

[AnneD]

14. I can't figure out what makes me angrier....

this bill or the fact that Congress thinks I am so stupid as to think they did me a favour.

Back in the early days they did charge you a certain amount over prime but then figured out they weren't gouging you enough. That's when things got out of hand.

Hey Capital One...want to know what's in my wallet-more cash since I chopped up your cards. Hey and as a reward-I have more cash in my bank account too.

[Hun Joro]

36. Both Congress and the AP.

[KathieG]

4. Soooo...

Did I miss the part where this will stop credit card companies from rate-jacking everyone? With no rate cap, and plenty of time for the credit card companies to rate jack everyone before the new rules take effect, this legislation sucks ass. :mad: Who do they think they are fooling with this shit?

[femrap]

15. So there is NO rate cap????

If that many Repugnants went along, I guess it's Bankster Friendly Legislation. And the American People will only see a headline and again will be BOHICA.

I'm sick of this gov't.

[pattmarty]

6. Yeah, big fucking deal. What about Bernie's amendment?????

[regnaD kciN]

20. Bernie's amendment lost 33-60...

...with even large numbers of "progressive Democrats" voting against it. :-(

[pattmarty]

38. Yeah, I know. I was being a little sarcastic after the fact.

[Swede Atlanta]

7. If the law comes to his desk Obama must veto it......

What is not included in this news release is that someone inserted a provision in the bill that would allow concealed weapons in national parks. I suggest that if this can't be taken out during conference with the House that Obama veto it.

Then we need to publicly reveal who inserted this provision (sure to be a gun-totin Republinazi). The public needs to see who is inserting totally unrelated provisions in this badly needed legislation. Perhaps more of the Rs will get voted out in 2010, 2012, etc.

[virginia mountainman]

10. HELL NO!

I am in support of the legislation, and its amendments...I am proud of my two Democratic Senators for their support on this issue!!

Now to get DC's Voting Rights passed...

[w4rma]

12. I agree. Keep this legislation and pass additional legislation as time shows it wasn't enough. (nt)

[florida08]

8. this is about as watered down as it gets

Consumers get a 60 day notice that their rates are going to jump? So what..if you have NO job that's NO help. Apparently the banks do own the senate. They have a lot of nerve trying to shovel this as reform.

[SpartanDem]

9. I think you're wrong

I believe you're talking about the provision where they can't raise the rate until you're 60 days past due and you get your original rate back if you stay current for 6 months. That's one better things in the bill


I think some people don't fully understand the bill this is from the congressional record summary:

Allows a creditor to increase an APR on the existing credit card balance only if the increase is due solely to: (1) a change in index; (2) expiration of the promotional rate; (3) payment not received during the 30-day grace period after the due date; or (4) consumer failure to comply with a workout plan. Prohibits any such APR increase from exceeding the APR applicable to the particular category of transactions on the day before the effective date of the workout plan.

Requires a 45-day advance notice of: (1) credit card account rate increases, except one resulting from a change in index, and (2) significant contract changes. States that a notice of an account rate increase shall not be effective before the end of the one-year period beginning when the account is opened.



This summary is from when it passed the house the grace period increased in the Senate version. So, as I understand it companies have to 45 days to give notice if increases, but they can't do it arbitrarily they need one of the listed reasons.

[florida08]

11. from the article

a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance.
If you have lost your job and can't make the standard payment you will see a rate increase in 60 days


Even then, the credit card company would be required to restore the previous, lower rate after six months if the cardholder pays the minimum balance on time.
ok..if you're able to make the minimun payment for 6 months you get a reduced rate? ..if that rate is 20% how does that help? We have a sterling credit rating and our Sears card/Citigroup has just changed our rating to 17% from 9%. Don't owe them anything and I assure you that card is long gone to the trash. Would advise everyone to watch your rates..regardless of what this grand gesture of reeling them in says. They should have capped the rates while we are in a recession and job losses are compounding..but that's just me.

[regnaD kciN]

21. Not enough...

I believe you're talking about the provision where they can't raise the rate until you're 60 days past due and you get your original rate back if you stay current for 6 months. That's one better things in the bill

Except what the banks will do, in the nine months they have before this takes effect, is to raise the interest rate on people they deem "high risk" to the exact same rate as the default rate. So, if someone fails to pay within sixty days, they can say "Because you were late, we are increasing your interest rate from your current 30% to the default rate of 30%. But don't worry...if you keep up your payments for six months, we'll lower your rate back down to 30%." Such a deal.

Allows a creditor to increase an APR on the existing credit card balance only if the increase is due solely to: (1) a change in index

What does "a change of index" mean? As far as I understand it, it means one's FICA score going down. But the problem is, with banks cutting their credit lines on millions of pre-existing customers, their FICA scores have already gone down, and they're thus sitting ducks for allowing any future rate charge. And, once this legislation becomes law, don't you think the banks will find new ways of calculating FICA scores, so that they can go up and down (i.e. down) at will?

The only positive thing I see here is the rule only allowing banks to impose the default rate on an account that's 60 days late, since some of the major banks have started imposing that rate on anyone who is even a few hours late once in their life. Other than that, this is pretty small potato(e)s.

[Lugnut]

16. How magnanimous of the Senate.

Banks have put mobster loan sharks out of business and Congress lets them.

[theophilus]

17. Don't let them fleece you! Pay it off and cut it up. Put the cards outa business! n/t

[regnaD kciN]

22. Once again, great advice if you can do it...

...but, for millions of people with outstanding debt of $10,000, $25,000, and higher, who have been ratejacked and thus have minimum monthly payments that swallow up all of their disposable income, it will take them a decade or more before they can "pay it off" -- and that's with chopping living expenses to the bone, cutting up their cards and never charging anything ever again. For them, simple bromides like "it's easy -- pay off your cards, go cash-only, and live within your means from now on" are almost mockingly impossible.

[LiberalAndProud]

18. We're paying our Senators for this crap.

This is crap legislation. It's slight of hand... See we CARE about you. Nonetheless, if it looks like shit and smells like shit, it's shit.

[high density]

23. Ah the classic DU response

The Senate moves a step in the right direction and everybody reacts as if it's worthless and they shouldn't even bother. Incremental changes.

Another boon for consumers is limiting a practice known as "universal default," when a lender sharply increases a cardholder's interest rate on an existing balance because the customer is late paying that bill or other, unrelated bills. Under the new legislation, a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance.

[Xipe Totec]

26. Senate OKs bill to reign (sic) in credit card practices

Source: AP

WASHINGTON – The Senate voted overwhelmingly on Tuesday to rein in credit card rate increases and excessive fees, hoping to give voters some breathing room amid a recession that has left hundreds of thousands of Americans jobless or facing foreclosure. The House was on track to pass the measure as early as Wednesday, paving the way for President Barack Obama to see the bill on his desk by week's end.

"This is a victory for every American consumer who has ever suffered at the hands of a credit card company," said Sen. Christopher Dodd, D-Conn., chairman of the Banking Committee. The bill passed the Senate 90-5.



Read more: http://news.yahoo.com/s/ap/20090519/ap_on_go_co/us_congress_credit_cards_29

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Maybe illiterate headline writers should not be LBN, but what the heck...

[Lorien]

27. The AP has truly hit rock bottom

they don't know the difference between "rein" and "reign"? Seriously? We always knew they were pretty half assed as reporters, but this is just humiliating.

[texastoast]

33. Is Anne Flaherty a victim of Whole Language?

Apparently, the editor must be.

[Demeter]

28. The Headline Was Probably Outsourced to India

and even though English is one of India's official languages, I have seen Hindi TV subtitles and they are a hoot.

[Ian David]

29. All Your Credit Are Belong To Us. n/t

[Soylent Brice]

30. here's the lmost recent version i could find:

http://www.govtrack.us/congress/billtext.xpd?bill=h111-627

[mike_c]

31. does anyone proofread any longer...?

Sheesh.

[Bluenorthwest]

32. Toothless bill by craven politicians

Obama should send it back for an interest rate cap, or it is really not very meaningful at all.

[harun]

34. Here's an article on how they already plan on hitting people a different way

http://www.msnbc.msn.com/id/30829066/

[OhioChick]

35. Time to cut up the credit cards. n/t

[florida08]

37. exactly

“Those that manage their credit well will in some degree subsidize those that have credit problems.”
(actually I wouldn't mind this if it were going toward helping someone else lower their balance..but that's not the case)

Banks are not required to publicly reveal how much money they make from penalty interest rates and fees, though government officials and industry consultants estimate they constitute a growing portion of revenue....

the amount of money generated by penalty fees like late charges and exceeding credit limits had increased by about $1 billion annually in recent years, and should top $20 billion this year.