Senate Bill Would Rein In Credit Cards' 'Extreme Penalties'

[Purveyor]

WASHINGTON (MarketWatch) -- Credit-card fees and terms can confuse even the most financially savvy consumers, but a growing chorus in Congress is calling for relief through tighter regulation of the credit-card industry.

Targeting "wild interest rate hikes," "extreme penalties" and other practices, Sen. Robert Menendez, D-N.J., introduced a credit-card reform proposal on Wednesday that he said would protect consumers from abuses.

"Too many families feel like their credit-card contracts are booby-trapped," said Menendez, a member of the Banking, Housing and Urban Affairs Committee. "Credit-card companies use a layer of fine print to conceal all kinds of trap doors: take one false step, then your credit rating plummets and your interest rate shoots through the roof."

A report last year found that about one-third of cardholders pay interest rates of more than 20%, according to New York-based think tank Demos. The Credit Card Reform Act would take steps such as limiting penalty interest-rate increases to a seven percentage point rise and prohibiting "universal default," a practice in which the issuer increases rates when cardholders don't make payments to other creditors or have an overall decline in their credit score.

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http://www.marketwatch.com/news/story/senate-bill-would-rein-credit/story.aspx?guid=%7B927FA59A-C1BF-4BDF-A46A-CE3D86DB8668%7D

[DJ13]

1. Reregulating credit card interest rates (a real cap)?

<crickets chirping>

Thank you Congress for being on top of the worst issues involving credit cards for consumers.........



:banghead:

[TransitJohn]

2. The reform that needs to happen besides caps:

When rates do get increased, ONLY NEW PURCHASES SHOULD BE SUBJECT TO THE NEW HIGHER RATE! Old balances taken should be subject to the rates in effect when the purchases were made. This alone would help lots of folks pay the evil credit card corps, and also to get themeselves out of debt. It's win-win.