WASHINGTON, May 11, 2009
Senate Deal Could Lower Credit Card Rates
GOP, Dems Compromise On Proposal That Would Allow Return To Lower Interest Rates For Struggling Cardholders
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Credit card customers behind on their payments may be able to return to lower interest rates under a new Senate proposal. (CBS)
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Photo Essay 111th Congress Convenes Members eager to join president-elect in tackling worst economic crisis in generations.
The Senate proposal was brokered between Republicans, who say lenders should be able to take into account a person's behavior, and Democrats, who contend that the practice of hiking rates on past balances prevent consumers from climbing out of debt.
The agreement was included as part of a broader package on credit card reform, announced Monday by Senate Banking Committee Chairman Chris Dodd, D-Conn. The bill was expected to pass this week with President Barack Obama's support.
Dodd had originally proposed an outright ban on retroactive rate increases. But without Republican support, his bill was considered unlikely to overcome procedural hurdles in the Senate.
The latest proposal would prohibit lenders from increasing interest rates on past buys unless the cardholder has fallen at least 60 days behind. At the same time, lenders would be required to review a cardholder's terms every six months.
"It makes a strong point to the industry that if they are going to change the terms of a card based on (risk) factors, it should be a two-way street," said Nick Bourke, manager of the Safe Credit Cards Project at the Pew Health Group.
Under the request by Republicans, the bill also would require the Federal Reserve to report to Congress every two years on the cost and availability of credit.
"Should this legislation become law, it is crucial that Congress carefully monitor its implementation and effect to ensure that this balance in design is also a balance in fact," said Sen. Richard Shelby of Alabama, the top Republican on the Banking Committee.
Senate Majority Leader Harry Reid told reporters on Monday that he thinks Republicans are jumping on board because they don't have a choice.
"I think they've come to the realization that there are a lot of good things they can be involved in. They can go home and take credit for helping us do this," said Reid, D-Nev.
Reid said the recent party switch by Sen. Arlen Specter, D-Pa., also has forced Republicans to become "more realistic."
Debate on the bill comes as the Center for Responsible Lending estimated that some 10 million cardholders have seen their interest rates increase in the last six months for no particular reason. Many cardholders have seen increases of 10 percentage points or more, the group says.
The Senate bill would require that promotional rates last at least six months. It also prohibits rate increases in the first year after an account is opened.
Other provisions in the bill would:
The bill would go into effect nine months after enactment. The House passed its own version of the bill in April by a 357-70 vote.
© MMIX The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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- What a joke, Nothing will change. All congress has to do is stop the practice of allowing contracts to change during the contract period. How come it's a fixed contract on our part and a floating contract on the bank's part?
Posted by jtdev1 at 6:24 AM : May 12, 2009
That is a very good point. Sounds like a good "class-action" suit. And, no, I'm not a lawyer or interested in frivolous legal suits, but the poster brought up a very good question regarding the fundamentals of fair contract laws. Even if the law says that they can alter the contract in the fine print, I would suggest that they should not have the right to do that to begin with as it overrides the basic principle of fairness in contracts. And if that IS somehow legal, then THAT is a law that needs to be changed ASAP! - Reply to this comment
- It's all fixed against us and both parties are to blame. They have their own vested interests and do not serve the people. They should have done better then this. Just look at how this whole credit card business is crafted to enslave the people.
Secret History of the Credit Card.
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/
Reminds me of how the Tobacco companies glamorized smoking knowing full well that it caused cancer and killed millions. And the Government didn't step in until they saw the people getting ready to revolt. - Reply to this comment
- the real problems are these: (1) people that unable to manage their finances and over charge their credit cards and (2) having a federal government that is now injecting itself into the day-to-day mechanics of managing independent companies! the later is far worse than the first - where will it stop?
Posted by fctex at 8:01 AM
Are you talking about the same "Independent" companies that begged the US Government for our tax dollars (1 Trillion so far) ??? - Reply to this comment
- I just called my credit card companies and asked them to lower my rates.
One company lowered my rate from 28.99% to 9.24%. :)
You'd be surprised how willing the companies are to comply with your requests. Lowering your rates is better than the alternative (not paying the debt). - Reply to this comment
- the real problems are these: (1) people that unable to manage their finances and over charge their credit cards and (2) having a federal government that is now injecting itself into the day-to-day mechanics of managing independent companies! the later is far worse than the first - where will it stop?
- Reply to this comment
- "Senate Deal Could Lower Credit Card Rates"
Wow - and I "Could" be the next US President..... NOT!
What a joke, Nothing will change. All congress has to do is stop the practice of allowing contracts to change during the contract period. How come it's a fixed contract on our part and a floating contract on the bank's part? - Reply to this comment
- credit card execs should be in prison for the damage they have caused to this countries economy with their high interest rates.
- Reply to this comment
- Too bad the great majority are not in the same boat.
I was fortunate that, as a young Marine, I served a tour in Japan - even learned Japanese.
That wasn't all I learned from them.
The typical Japanese is looking 20-30 years down the road and saves his money.
Most Americans are looking 5 minutes down the road to their trip to the mall.
Posted by formrusmcsgt a
That's also why the Japanese haven't shipped most of their job base to third world nations to the detriment of their own economy. Unlike the CEOs and idiots on Wall Street, they tend to look much further down the road than the next fiscal quarter. - Reply to this comment
- What a spineless, craven lot Congress is! Not just the usual lickspittle Repigs, ever anxious to suckie up to the Billionaire class, but even Dems, in a majority, can't work up the guts to tackle the Walstreeters.
Now we see who really own America.
Posted by johnb8888
It took you this long to come to that conclusion? Most of us had our "suspicions" confirmed when they used taxpayer money to pay AIG's bonuses. - Reply to this comment
- What a spineless, craven lot Congress is! Not just the usual lickspittle Repigs, ever anxious to suckie up to the Billionaire class, but even Dems, in a majority, can't work up the guts to tackle the Walstreeters.
Now we see who really own America. - Reply to this comment
- No-one but me got me into debt... no-one but me could get me out.
.
Free at last... Free at last... Thank God, I'm free at last.
Posted by wyodutch at 4:44 AM : May 12, 2009
Too bad the great majority are not in the same boat.
I was fortunate that, as a young Marine, I served a tour in Japan - even learned Japanese.
That wasn't all I learned from them.
The typical Japanese is looking 20-30 years down the road and saves his money.
Most Americans are looking 5 minutes down the road to their trip to the mall. - Reply to this comment
- A year ago, my credit card balance was $17K. Today, it's $7K and by the end of June, it will be zero. I decided that I no longer wanted to be a slave to the Shylocking Banksters and did some financial re-prioritizing. I now pay cash for all my purchases... Just like folks did before the banksters realized how easy it was for most folks (me included) to get hooked on plastic. No-one but me got me into debt... no-one but me could get me out.
.
Free at last... Free at last... Thank God, I'm free at last. - Reply to this comment
- I don't disagree with you.
However, in a lot of cases the banks themselves with their preditory ways enable the credit junkie society, like handing college students credit cards - they very same students who most likely will have crushing college loans is a poor management at its worst by the banks!
Posted by ozilot at 4:30 AM : May 12, 2009
You are more fogiving of personal irresponsibility than I.
No lender holds a gun on anyone to make them take their money.
People WANT to take their money and then bytch about having to pay interest as the price for having been stupid enough to spend another's money in the first place. - Reply to this comment
- Most Americans demonstrate the money management skills of a kindergartener with his allowance burning a hole in his pocket.
Pitiful.
Posted by formrusmcsgt at 4:20 AM : May 12, 2009
I don't disagree with you.
However, in a lot of cases the banks themselves with their preditory ways enable the credit junkie society, like handing college students credit cards - they very same students who most likely will have crushing college loans is a poor management at its worst by the banks!
Also society, in the form of keeping up with Jones, Wangs, Garcias, etc., enable the credit junkie society.
Perhaps congress should consider a different approach...like making interest on savings/checking accounts tax free...the more money you save, the more interest you earn and tax free income , albeit a little tax free income at that -- but I believe that would motivate some to save more. - Reply to this comment
- But the real bottom line here is that America is a consumer society addicted to other peoples and nations' money and we need to break that bad habit in a hurry!
Posted by ozilot at 4:18 AM : May 12, 2009
Most Americans demonstrate the money management skills of a kindergartener with his allowance burning a hole in his pocket.
Pitiful. - Reply to this comment
- The fact that a lot of Americans who have catastrophic medical emergency who by necessity must resort to credit cards and the resulting catastrophic high debt and high interest rates really is a sympton of the fact that our medical system s.ucks!
This really begs the question of why this nation does not have universal health care, in the final analysis it would relieve a lot of people from credit crisis to obtain health care, lower business expenses by eliminating the need to provide health care to employees - making them more cost effective and competitive, and provide a widen breath of the population with care and lowering tax payer cost in the form of covering the uninsured patients who get care at emergency rooms.
On the flip side, bad credit practices by both the banks and consumer is equally bad period.
The banks should have the ability to cover their risk, which means high interest rates for those who demonstrate bad money management skills. On the other hand, I agree that if a card holder who changes his/her credit behavior, e.g., pays their bills on time should be rewarded with lower credit costs.
But the real bottom line here is that America is a consumer society addicted to other peoples and nations' money and we need to break that bad habit in a hurry!
The good news is people can change. I once had credit card debt over $25,000 and I must have paid for it to the tune of 10 times my balance over the life of that debt. But I managed to pay off, and I still use my credit card for 95% of my living expenses...but I pay the balance off monthly and don't pay any interest charges...and yes I have very low interest rates - not that I pay them because I don't carry debt anymore.
The real solution to the credit issue is for people to manage themselves, their consumerism, and their finances. - Reply to this comment
- They still make their money just fine after this.
Posted by ivandrago at 4:05 AM : May 12, 2009
Sure they do - because of fools like yourself who willingly give it to them. - Reply to this comment
- I think most already know what will come out of the Senate. The Senate is the rich-boys chamber of our government as opposed to the commoners house side. Did people really forget that these are the very same folks that wrote the rules and regulations that we are now living under???? Do you think they will actually 'un-do' what they have worked so hard over the years to put in place???
- Reply to this comment
- The new American dream - get 8 credit cards, max them all out, and then live like a pauper in the midst of your toys......
- Reply to this comment
- I missed "a" card payment deadline while I was moving overseas, and those jerks at HSBC more than doubled my interest rate. I don't feel sorry for them at all. They still make their money just fine after this.
Posted by ivandrago at 4:05 AM : May 12, 2009
Guess what? If you had the discipline to live within your means, you wouldn't be putting your money in other people's pockets.
It would be in your pocket instead. - Reply to this comment
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