Legislation Targets Retroactive Rate Changes on Credit Cards

[The Straight Story]

Legislation Targets Retroactive Rate Changes on Credit Cards

Maryland could become the first state in the country to make it illegal for credit card companies to retroactively change their interest rates, a practice that can force people who owe money further into debt.

The legislation passed the House of Delegates last week, and its prospects in the state Senate probably will be boosted by a national mood that has turned powerfully against banks and in favor of struggling consumers.

The bill would prohibit card companies that change their rates from applying the new rate to debt a consumer already has incurred. Card companies often do that now when a computer detects that a customer has missed a payment on a different card or loan. Even if the customer decides the new rate is too high and cancels the card, the new rate can be applied to debt the customer already has.

Federal regulations adopted in January would establish similar protections nationwide in July 2010. But if the Maryland bill passes, it would go into effect this summer, giving state consumers the safeguards a year early.

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/21/AR2009032101840.html?hpid=moreheadlines

[Jeep789]

1. Now if only Delaware would do the same

That would be news.

[meegbear]

2. Hear! Hear!

Should be barred nationwide.

[AndyA]

3. Absolutely. Such practices on the part of credit card companies should be illegal.

Their agreements basically say, "We can do whatever we want to do, provided we notify you that we're going to do it. Your only right is to close your account and pay off the balance if you don't like the changes."

It's time for some fairness and some responsibility that benefits BOTH parties.

[Phentex]

4. I don't understand how

these practices have been allowed for so long. It's been years and years of people falling behind when the rates are raised, itty bitty fine print on change notifications, altering due dates, etc. The companies seem to purposely make things difficult for people!

Is it because the banks are in so much trouble NOW, people are finally doing something about the crappy practices?