David Kirkpatrick

October 17, 2009

The credit card industry got greedy

No surprise there. Credit is certainly a privilege and not a right, but the industry players have proven to be bad actors when operating without significant oversight. With the Credit Card Accountability, Responsibility and Disclosure Act scheduled to go into full effect over the next year — different provisions begin at different times — the industry took the grace period as an opportunity to gouge customers in the midst of this economic climate.

Needless to say Congress isn’t looking too kindly on Main Street being put under that much more economic pressure. The credit industry might want to start making major concessions and end predatory practices lest Congress decides the new act doesn’t go far enough.Now that the recovery is looking quite jobless and by appearance, if nothing else, mostly benefits Wall Street and the topmost tier of “haves,” a Democrat-controlled government may want a few pounds of flesh for the “have-nots” in this scenario.

From today’s NYT op-ed:

Some of the worst (and most common) abuses are now scheduled to be outlawed in February. These include the practice of arbitrarily raising interest rates, penalizing customers when they are late paying a bill unrelated to the credit card — so-called universal default — and charging customers interest on debt that they paid off a month or more earlier.

The banks claimed that they needed the long lead time to rework their computer processing system. Consumer advocates warned that this would invite banks and credit card companies to wring as much as possible out of consumers before the law finally took effect.

They were right.

A forthcoming study from the Pew Charitable Trusts’ Safe Credit Cards Project shows that credit card interests rates — already too high — rose by 20 percent in the first two quarters of this year, even though the cost of lending went down as a result of low federal interest rates. In testimony before Congress earlier this month, one consumer advocate cited case after case of struggling consumers who had seen their credit card rates more than double for no apparent reason, even when they had faithfully paid on time.

[picapp src=”c/7/e/3/Credit_Card_Reform_710f.jpg?adImageId=6013100&imageId=4829305″ width=”500″ height=”303″ /]

2 Comments »

  1. […] (Co-posted from here.) […]

    Pingback by Credit card industry facing Congressional smackdown « davidkirkpatrick — October 20, 2009 @ 5:07 pm

  2. […] insurance premium — davidkirkpatrick @ 3:14 pm It sure seems like it. This is akin to the credit industry going draconian in advance of increased regulation only to prod DC into pushing the date of all that regulation up […]

    Pingback by Is the insurance industry trying to force health care reform? « David Kirkpatrick — February 15, 2010 @ 3:14 pm


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