Obama Vows Crackdown As Banks Hike Fees

(CBS)  Millions of Americans are saddled with high debt. Now, the White House says it will back new legislation cracking down on credit card companies for surprise fees and sudden rate hikes, reports CBS News correspondent Kimberly Dozier.

The White House took aim today at banks who've been hiking fees and credit card rates just as consumers have been hit hard by the economic downturn.

"People are not paying their credit card bills. More people are getting into trouble financially as they lose their jobs. So banks have retaliated more or less in terms of what they are doing to the customers," said Joan Goldwasser of Kiplinger's magazine.

Chase has added a $120 fee on some of its "no fee" cards. American Express raised its late fees on some cards from $29 to $39. And Bank of America and Chase have doubled interest rates on some customers, to up to 30 percent.

Penalty fees are also growing. Banks raked in $19 billion in penalties in 2008, up 5 percent from the year before.That's projected to rise to $20.5 billion this year.

New federal regulations kick in to protect the consumer in July, 2010 but Congress - and now, President Barack Obama - want to see that happen faster.

"He's going to be very focused in the very near term on a whole set of issues having to do with credit card abuses, having to do with the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew they were getting themselves into," Larry Summers, the president's top economic advisor, said on NBC's "Meet the Press."

That comes none too soon for the folks paying those fees.

CBS News talked to consumers who said their interest rates had shot up recently. One said that he couldn't keep his credit rating steady even though he pays off his credit card bill every month.

Banks argue that they are the ones caught by the credit crunch, and that hiking fees is a matter of their economic survival. Credit card borrowing is actually down 9.7 percent in 2008. Meanwhile, credit card users are defaulting on payments in record numbers more than 5.5 percent in the fourth quarter - one of the highest delinquency rates ever.

The president will meet with the heads of 14 credit card companies this week. Bank of America has already made changes - it just suspended a hike in overdraft charges, and it's now waiving some fees for customers who have lost their jobs.

[joethevoter]

By all means stay away from Bank of America. Biggest thieves of all. I had a debt with them. I was stupid enough to let them get me to switch my bank accounts to them...then they grabbed my entire savings account. Thankfully I had not yet transferred everything to them because they had screwed up getting my checks and debit cards to me so I could use the account or they would have put me out of business completely. NEVER trust any bank...they are not your friends and never will be.

[joethevoter]

Count me among those who defaulted. Not because of the high interest...because the crash cost me my only retirement asset, a duplex I rented. Could not rent...all the Mexican's left because of no construction. Left a mess. I needed to use cards to fix it then the rent's fell to the point I could not get enough to cover costs. Taxes went UP. Income went down. This happened just before the greedy banks started to screw with people for their own greed. I don't have anything...what are they going to do?

[ianlou]

I have not done any business in a Bank for 30 years.
I have not had a ballance on a credit card for 25 years.

I get a continual stream of platinum credit card offers via junk mail.
It seems the less I use a credit card the more "they" want me to.

[ianlou]

Need Floating Credit,
Get a Home Equity Loan from your local Credit Union and access it via a Debut Card.
Interest Rate? 6 % Period.
Set up an automatic payment plan and keep the ballance reasonable.

Screw Banks and Screw Credit Cards.

[Prevost1580]

The CC companies are evil. I understand if the person pays late but it's the CC companies who make the offers and as long as the person is making more than the minimum payment and not going over the limit,the CC companies should not be allowed to scam ppl.

One company to avoid is Barclay/Juniper. These scumbags will lower your limit and raise your rate,when you are not paying attention. Then you go over limit and Barclay/Juniper charges you tons of over the limit fees.

[TheMasses01]

Time to nationalize the banks. And while we are at it, do the oil companies and medical insurance companies.
Posted by noloyalisti
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We don't do that in America you commie chump.

[TheMasses01]

Obama Vows Crackdown As Banks Hike Fees
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When Barry The Chump "vows" or "promises" anything - just replace those words with "lies".

[noloyalisti]

Time to nationalize the banks. And while we are at it, do the oil companies and medical insurance companies.

[stewie_g]

Who came up with the idea 'if you're not going to pay me the money that you owe me, then I'll just charge you more. That'll teach you!" If people aren't paying credit card debt, then do the same thing they do with all other debt, go to collection agencies and/or court. Why do banks have free reign to simply say "well, now I feel like you should pay me triple the agreed price, even though you obviuosly can't afford it." It's about time government took action. The banks review each persons credit card application IN DETAIL. They knew the risk and granted it anyway. That is their decision, and nobody but them should take the hit. You want people to pay their debt? DON'T GET THEM IN OVER THEIR HEADS IN THE FIRST PLACE.

[omega39-2009]

It is far past time to rein these pirates in. There was a time when states could regulate these interest rates and most cards were capped at 18% interest. This all changed on a 1978 USSC decision that said banks could import their "home" state policies into the states they do business in. These banks aren't all based in Delaware and South Dakota on accident.