5 On Your Side

Protections for credit card users in the works

Posted April 23, 2009

The days of complex fine print, sudden interest rate hikes and extra fees may soon come to an end.

The U.S. House and the Senate are both pursuing bills that would give consumers protections from the credit card industry.

Credit cards U.S. government takes on credit card companies

Carol Chapman welcomed the idea. She said she paid her bill on time and still saw her interest rate jump from under 2 percent to almost 30 percent.

"Who pays 30 percent? I mean, it's almost like loan sharking to me,” Chapman said.

That consumer outrage led President Barack Obama to press for changes. Thursday he met with top executives from the nation's biggest credit card issuers.

"The days of any time, any reason rate hikes and late fee traps have to end," Obama said.

Credit-card debt went up 25 percent in the past 10 years, reaching $963 billion by January, according to numbers released by the White House.

White House press secretary Robert Gibbs said, the executives told Obama that current credit-card regulation "is probably enough." But Obama said he wants more legislation to protect consumers.

From March 2007 to February 2008, credit card companies raised the interest rates of nearly a fourth of all accounts. That cost consumers an estimated $10 billion in extra finance charges.

Gibbs says lawmakers are stepping in because many of the big banks that are raising fees and penalties got billions in taxpayer bailout money.

Congress is also taking action by working on a so-called "Credit Card Bill of Rights." The bill would stop companies from suddenly hiking interest rates, plus put a cap on many fees and extend billing cycles.

"We believe with President Obama's support, we can do it – and working American families deserve it,” said Rep. Carolyn Maloney, D-N.Y.

Credit card company executives also told Obama that they are working to make contracts simpler for card holders, but some argue creating tougher rules will only make credit harder to get.

In December, the government adopted new rules requiring companies to only be able to raise rates on new cards and future purchases, rather than on current balances. Also, companies must give customers 45 days notice before changing the terms of an account.

The problem is the rules don't take effect until July of 2010, and some say that is why credit card companies are raising rates and fees now.


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  • ThisGuy Apr 29, 2009

    Another one for you to beware about is Lowes Home Improvement. They are creating a cyclical problem where they will lower your available balance, then check your credit(which will have lowered because of them lowering your balance), and then lower your available balance based on the fact that you credit is lower. Which.. Hello! they caused in the first place. My girlfriend has already been dinged on this twice and when talking to the call center for the Lowe's card, they couldn't seem to comprehend the logic behind that. I would say, of course, that it could be due to other things. But so far they are the only creditor she works with that is doing anything to hurt her credit, and everyone has been paid on time.

    If WRAL does another write up on these credit cards making it harder for credit to be freed up I would highly suggest using this as an example since Lowes is more than willing to tell you they are doing this. Needless to say we are going to Home Depot now.

  • grgrowen Apr 27, 2009

    My credit score is close to 800. I recently recieved a notice from "DISCOVER" that my rate would be going from 7.5% to over 19% for no apparent reason. When I called to inquire I gat a brick wall answer that their not reducing rates for anyone at this time and if I didn't agree with the terms, I could pay off the balance and close the account.
    These companies are gougeing customers ahead of regulation. I'll be interested to see how many customers these predatory lenders have after it all shakes out. I am confident there are pleanty of decent fair-minded companies out there that would be happy to have my business. "DISCOVER" certainly will not!

  • Adelinthe Apr 24, 2009

    I actually look forward to (the some day) strict government regulation on the rates that can be charged on credit cards.

    I don't like government regulation, but on this - I endorse it.

    God bless.


  • jet2rdu Apr 24, 2009

    There at one time were state laws, including here in NC, limiting credit card interest rates. Most states had a maximum rates of 12% to 18%. But thanks to our wonderful legislators, US Congress and the Supreme Court a credit card company can move to South Dakota or other state where there is no maximum interest rate and unlimited fees and charge consumers whatever they please. I wonder how many campaign donations by bankers were made to the public officials who voted to remove the caps. Now some of the same people in Congress who voted to remove caps, thanks to the banking lobby, such as Sen. Dodd (Dem-CT), are going to help the consumer. Hold on to your wallet.

  • IzzMad2016 Apr 24, 2009

    Chase is one of the worst offenders. I paid them off about 7 years ago and vowed to never, ever knowingly do business with Chase or one of their affiliates again. I told the customer service rep to remove my name and address from their files permanently and that if I ever received a piece of mail or a phone solicitation from them that I'd report them to the FCC. She answered me with "yes ma'am's" through clinched teeth, I could tell. I doubt they miss my business but that's fine..I don't miss their gouging either.

  • me2you Apr 24, 2009

    I'm glad something is finally being done. It's getting out of hand and they're going to keep doing it if there is no intervention. They don't care about customers...only making money. I used to work for credit card co. and saw it.

  • DontLikeTheSocialistObama Apr 24, 2009

    When they tighten up the credit card regulations,people with poor credit will not be able to get a credit card. Then we'll see Obama force banks to give credit cards to people with poor credit.

  • aandfkid22 Apr 24, 2009

    I have to agree about First Citizens. I've also been banking at one of the Cary branches since I moved my accounts from Wachovia last fall, and I could not be happier with the people and what they have to offer. I got a new card with them about a month ago and I was absolutely shocked at the rate I was able to get...and I don't have the best credit in the world! Not to give them a shamless plug or anything, but I think in this economic climate when someone's doing a good job and treating people right they should get some recognition for it.

  • TomLynda Apr 24, 2009

    mep, you are right on the money. Obama wants to ultimately control everything, and the scary thing is that Congress is giving it to him on a silver platter. Be afraid. Very afraid.

    And yes, First Citizens is a straight up bank. They did not take any of the bail out money.

  • mep Apr 23, 2009

    QUOTE: "Gibbs says lawmakers are stepping in because many of the big banks that are raising fees and penalties got billions in taxpayer bailout money"..... but it is interesting that those same banks can not payback the bailout money early to avoid paying the additional interest, (unlike credit cards/loans) AND the entire time the bailout money is being paid back, Uncle Obama can hire/fire anyone he chooses. Seems big govt wants to take control of far more than they want us to know.