Feds want to put a stop to credit card company scams

Clark Howard was talking about how credit card companies lure you in, get you drunk on plastic with low interest rates, and then once they see you’ve got a big balance going, they say, “We were just kidding! Your interest rate is now 17%!” Clark says that credit card companies have even raised it to 39%. Under current federal regulations, a bank is allowed to raise your interest rates on previous purchases with only 15 days notice. There’s been so much uproar about it around the country, that after great delay and much legislation, the Fed and other agencies have issued some proposed rules for the credit card industry. Instead of 15 days notice, you’d get 45. Another new rule is that a bank would be free to raise interest rates on future purchases, but on any balances that already exist, the interest rate you purchased under would apply.

H.R. 5244: Credit Cardholders’ Bill of Rights Act of 2008

The banks are going crazy, because these rules would destroy their ability to cheat you. But that’s what Clark thinks the banks are doing, which is nothing short of slimy. When the Fed issued these regulations, they got over 60,000 comments from bank lobbyists–usually they only get a couple hundred at most. The head of the Office of the Controller of Currency even took it upon himself to plead the case for the banks. Clark really wishes he could get him to come on the show so Clark can ask him why he wants to stab the American people in the back. One of the arguments the Controller makes is that by issuing these rules, there might be less credit made available to the people. Clark says: “As if the American people need more credit!” Spending money we don’t have is how we’ve made our position weaker in the world. If banks can’t lend money to people because they can’t rip off the customers in the end… so what? That said, it’s a free market. If someone says they want to lend money at 35%, that’s their right. But if they promise a 7% rate, they shouldn’t be able to raise it after the fact. This whole issue has Clark really steamed.

Read this article from philly.com

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Tags: Clark Howard, credit cardholders bill of rights act, credit cards, hr 5244, interest rates, office of the controller of currency

One Response to “Feds want to put a stop to credit card company scams”

David Z Says:
December 2nd, 2008 at 12:46 am
My complaint is not the fact that they want to lend money at usurious rates, To each his own, there’s a sucker born every minute.

My complaint is the fact that these companies have the legal capacity to literally loan money into existence. With that in mind, charging *any* amount of interest ought to be a crime.