A Rollback of Credit Card Rate Hikes?

Okay, so everyone, including moi, kvetched about the fact that the CARD Act of 2009 wouldn't go into effect until February 22, 2010. Some folks thought this all was just so much whining and posturing by consumer advocates who want everything to go their way.

But it turns out that the fears of complainers like me were realized, thanks to the banks' keenness to get every penny in their coffers before D-day. Since the announcement of credit card reforms by the Fed (which are now superseded by the law) last December, practically all issuers have raised interest rates on their cards.

I laughed when I got a hike on my Capital One card in April. Long ago, CapOne had insulted me by hiking my rate to an unseemly 29% because I paid late on a bill. That wasn't what insulted me. I called the company and asked for mercy, and the rep would give me none -- no break on the rate and no waiver of the late fee. That's when I was insulted. "Fine," I declared. "Keep your *&^*#@% card. I am cancelling!" I paid off the balance that evening.

Then, two days later, I got a solicitation from CapOne offering me a special low rate on the card I had just cancelled. So I phoned 'em again. "Is your company schizophrenic?" I asked. "First, you taketh away, and now you want to giveth. Make up your bleepety-bleep minds." Well, CapOne decided to leave things as they were.

The break-up was short-lived, however. Only a couple of months later, needing a second credit card for some reason or other, I responded to a CapOne solicitation for a card with a super-low rate. Figuring that the company probably had Alzheimer's disease as well as schizophrenia, they'd probably have forgot our sordid history together and might want to have another go. I was right. The new card arrived in the mail a few days later.

Something about the incident stuck in my craw. I only used the card as a back-up -- and then almost never. Poor CapOne sent me letter after letter, begging me to use the card, offering rewards and contests and checks and heaven-knows-what-all. Occasionally, I felt sorry for the company, spending so much in vain to get my business; so once in a while, as an act of charity, I would charge $30.

Anyway, this went on for maybe eight or ten years. Then, early this year, launching a career as a free-lancer (involuntarily, after being laid off, but, that's another story), I thought, "Eureka, I will use the CapOne card for business expenses, making life easy at tax time. Well, I couldn't even find the card--that's how much I had neglected it. I called the company, and, of course, they immediately sent out a new card. CapOne will finally get business out of me, I thought.

Well, not so fast: Just as I was about to charge a brand-new computer, I get the letter in the mail. CapOne's bidness was bad; so my rate was hiked to 14%. I laughed and charged the computer to another card -- one with a lower rate and airline miles.

So what's the point of all this? Nothing at all. This is a blog, folks, not the Atlantic Monthly!
Oh yeah, there is a point, though it has nothing to do with my CapOne memoir. You see, notices of rate hikes like the one I received have been going out to millions of Americans since last December. Newsies like myself twigged to what was going on this spring. Even Jim Cramer of Mad Money fame, rarely the first to register consumer outrage, complained about the issuers' chutzpah in a February editorial.

Despite all that, it took Senator Christopher Dodd (D-Conn.), one of the major architects of the CARD Act until last week to notice that rates had gone up. He was "disturbed," he wrote in a letter to Fed Chairman Ben Bernanke, and he asks the chief to enforce a provision of the new legislation that requires credit card companies "to review every six months any account where the interest rate has been raised since January 1, 2009, and reduce the rate if the review indicates that the cardholder has become less risky or the circumstances that warranted the increase are no longer present." Dodd goes on to ask the Fed to make sure that banks review all rate increases since the beginning of the year -- and to provide "clear, robust requirements for the review of rate increases."

Like that's gonna ever happen, Senator Dodd. First of all, it took the Fed two years or so to implement its own new regulations and announce them last December. And, their effective date was an even further off August, 2010. By the time the Fed figures out how to make card companies review and roll back recent rate hikes, not only I, but my adult children, will be using walkers.

So here's my letter to Senator Dodd: Dear Sir: I too am disturbed about those abusive rate hikes. But instead of complaining to the Fed about them, wouldn't have it been simpler to make the law take effect sooner rather than waiting nine whole months?

I'm just saying.