October 26, 2009
DODD INTRODUCES BILL TO IMMEDIATELY FREEZE CREDIT CARD INTEREST RATES
WASHINGTON – Today Senate Banking Committee Chairman Chris Dodd (D-CT) will introduce a bill to immediately freeze credit card interest rates, fees and finance charges on existing balances.
The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act enacted in May prevents arbitrary interest rate, fee and finance charge increases on a customer’s existing balance. Unfortunately, credit card companies have been jacking up rates in a last ditch effort to squeeze customers before all of the bill’s provisions can take effect.
“Already, the Credit CARD Act requires 45 day notification of interest rate increases, and increases from 14 days to 21 days the amount of time before a bill is due that a statement must be delivered. The bill Dodd introduced today would force companies to immediately freeze rates, finance charges and fees on existing balances until the remaining provisions in the Credit CARD Act go into effect.
“We worked long and hard to enact the safeguards included in the Credit CARD Act,” said Dodd, who had introduced the bill in 2004, 2005 and 2008 before successfully passing it this spring. “But as soon as it was signed into law, credit card companies were looking for ways to get around the protections this Congress and the American people demanded. This bill would end those abuses and further protect customers today.”
“At a time when families are struggling to make ends meet, jacked up rates can quickly create crushing debt. People need to be responsible with their money, but they shouldn’t be taken to the cleaners by outrageous rates.”
In April, Chairman Dodd and Senator Schumer sent a letter to the heads of the Federal Reserve, OTS, and NCUA calling on them to implement an emergency freeze on interest rates tied to existing balance on credit cards.
For those accounts that have already seen rate increases, the Credit CARD Act requires credit card companies to review every account that has seen an interest rate increase since January 1, 2009 and reduce rates where warranted. Dodd sent a letter to the Chairman of the Federal Reserve and the heads of key regulatory agencies in July directing them to let credit card companies know that they will be held accountable for rate increases. He also called on the Federal Reserve to provide clear, robust requirements for the reviews and called on the agencies enforcing those regulations to hold the credit card companies strictly accountable for conducting thorough reviews and decreasing rates.
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