Credit Card Companies Respond to Consumer Protection Bill
Credit card companies are taking action ahead of the new Credit Card Consumer Protection Bill that will take effect in February of 2010. The bill was passed in May of this year and limits the ability of a credit card company to raise interest rates and late fees. The new law forces credit card companies to simplify their terms so that consumers don’t get hit with the unexpected rate or fee increases.
The banking industry lobbied against the bill, saying it could limit credit at a time when the economy is already struggling with a credit crunch. However, credit card companies make most of their profits off of consumers who go too far into debt or fall behind on their payments. In response, some credit card companies like Bank of America, Chase, Citigroup and American Express began going after consumers with a solid credit history.
Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.
Read the story on CNN about the bill and a couple who had Chase bank raise their interest rates despite having good credit, here.