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Protect Credit Card Holders Now, Cap Interest Rates

BURLINGTON, December 19 – Senator Bernie Sanders (I-Vt.) today called it absurd that federal regulators put off until July 2010 new consumer protections against credit card industry abuses like arbitrary increase in interest rates.

“For far too long, credit card companies have been allowed to charge sky-high fees and loan-shark interest rates to pad their profits. Why should they get another year and a half to rip off American consumers?” asked Sanders, who for years fought for legislation to stop credit card abuses.

Under the new regulations approved yesterday, credit card companies will be able to raise interest rates only on new credit cards and future purchases or advances, but not on current balances. Companies will have to give credit card holders 45 days’ notice before any changes are made to the terms of an account, including a higher penalty rate for missing payments or paying bills late. The regulations also will stop lenders from applying all payments to balances with low interest rates when a borrower has balances with higher rates.

The rules were approved by the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration.  Most of the rules were proposed by the Fed as long ago as last May.
 
“These are all long-overdue steps, but if the bank regulators were serious about stopping unfair and deceptive practices they would ban them now, not a year and a half from now,” Sanders said.

The senator said he will introduce legislation to cap bank fees and interest rates and support legislation to put the consumer protections into law immediately. 

“American consumers are suffering through the worst economic crisis since the Great Depression.  They can no longer afford to pay interest rates that would make even a loan shark blush.”