June 30, 2009 - 3:57am
Most issuers have raised credit rates or fees for certain borrowers. In the latest round, Bank of America and Chase have raised, or are raising, 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 increasse card rates for certain borrowers.
A growing number of consumers lose their jobs, and default in record numbers on their credit card debt has caused the above actions. Besides, the industry is 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.
However, the banking industry blamed Congress for higher rates and fees because banks had predicted that restrictions on pricing would lead to higher costs for everyone. According to Scott Talbott, a senior vice president for the Financial Services Roundtable, the changes are a "natural result" of the new law:"
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. Besides, Schumer slammed issuers for trying to "wring more dollars out of their customers.
In addition, Ruth Susswein, deputy director of national priorities at Consumer Action, says that issuers' pricing changes mean that consumers have to keep an "eagle eye" on the fine print of their bills.
A growing number of consumers lose their jobs, and default in record numbers on their credit card debt has caused the above actions. Besides, the industry is 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.
However, the banking industry blamed Congress for higher rates and fees because banks had predicted that restrictions on pricing would lead to higher costs for everyone. According to Scott Talbott, a senior vice president for the Financial Services Roundtable, the changes are a "natural result" of the new law:"
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. Besides, Schumer slammed issuers for trying to "wring more dollars out of their customers.
In addition, Ruth Susswein, deputy director of national priorities at Consumer Action, says that issuers' pricing changes mean that consumers have to keep an "eagle eye" on the fine print of their bills.