Consumers hit again as some banks raise credit rates, fees

[Joanne98]

By Kathy Chu, USA TODAY

The ink has barely dried on credit card reform signed by President Obama in May, and already, issuers are raising prices again.

Most issuers have raised rates or fees for certain borrowers. In the latest round, Bank of America and Chase have increased, or are increasing, their maximum balance-transfer fees, from 3% to 4% and 5%, respectively. Chase is also expanding the definition of who could get hit with a penalty interest rate. Meanwhile, InfiBank is establishing a higher minimum APR — the greater of 15.99% or 11.99% plus the prime rate — on many cards. And Capital One and Citigroup continue to raise card rates for certain borrowers.

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. That new law limits when issuers can raise interest rates on existing debt and charge late and over-limit fees. But it doesn't impose a cap on card rates and fees.

Keefe Bruyette & Woods analyst Sanjay Sakhrani says issuers are repricing accounts "given the pressure from a high level of charge-offs and delinquencies and ahead of the rules being implemented."

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. The changes, according to Scott Talbott, a senior vice president for the Financial Services Roundtable, which represents the nation's largest banks, are a "natural result" of the new law: "The industry is restricted in setting credit terms based on the borrower's individual risk profile, so the price goes up for all borrowers."

Yet some critics say that issuers are taking advantage of a loophole in the law to bolster their financial conditions. Increases in credit card rates have been "widespread" as issuers try to make up for falling revenue because of higher loan losses and pending restrictions, says Bill Hardekopf, chief executive of LowCards.com, an information site.

Sen. Charles Schumer, D-N.Y., and Sen. Christopher Dodd, D-Conn., have called unsuccessfully on federal regulators to impose an "emergency freeze" on rate increases on existing credit card balances.

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http://www.usatoday.com/money/perfi/credit/2009-06-29-banks-fees-credit_N.htm

Because the CONSERVADEMS in the Senate voted with the Republicans blocking a cap on interest rates at 15%. NOW they get to rape the American people thanks to the TRAITOR CONSERVADEMS IN THE SENATE!

The SCUMBAG TRAITOR CONSERVADEMS BETTER GET THEIR SHIT TOGETHER. They better NOT vote against a public option plan in the healthcare bill.

[Raineyb]

1. This is what happens when you give these rapacious assholes wiggle room

They start by predicting fee hikes. Then the law passes and in the grace period (which is more than we as customers get I might add) they jack up fees and interest. Then they say "I told you so."

Gotta love those self-fulfilling prophecies.