Senator Schumer Supports Earlier Credit CARD Act Activation
In the past few months, credit card companies have been engaged in raising their interest rates and fees to astounding levels while dropping available credit to a mere fraction of its original value. They’ve also hiked their minimum amount due rate and even added new fees, some of which penalized credit card holders for being prudent in their credit usage.
Credit card companies are following these actions as they prepare for the activation of the Credit Card Accountability Responsibility and Disclosure Act of 2009, a controversial set of legislations that aims to change the credit industry to be more friendly to consumers. A lot of the legislation in the Act would severely hamper many of the current profit sources of credit card companies. Because of this, credit card companies are now doing what they can to maximize their profits while they still have some control over their profit sources, regardless of the financial difficulties of their customers.
The Credit CARD Act was signed into law last May of 2009. Activation of the elements of the Act was staggered across several months, however. The major legislations in the Act were set for Activation on either February or August of 2010. Currently, some minor legislations of the credit card act are already active. These have more to do with credit card companies releasing timely information to credit card holders such as the legislation requiring 21 days notice before a bill gets penalized with interest fees and 45 days notice before any interest changes are made. However, given what credit card companies are doing at the moment, many feel that simply giving notice of changes is not enough.
Senator Charles Schumer said that the disclosure of any new fees is not enough for credit card holders. “You have to have some protection for consumers. You can’t let them do whatever they want as long as they disclose it. You can’t expect people to be lawyers”, he said.
As such, Senator Charles Schumer said, the Federal credit card legislation which is scheduled to become law on 2010 needs to be enacted earlier than scheduled. This is to stop the practice of credit card companies of hiking their interest rates before the Act takes effect.
Schumer went on to cite a study from Pew Charitable Trusts which showed that credit card interest rates hiked up to 20% during the first six months of this year, 2009. This happened while the federal interest rates dropped. He accused credit card companies of basically gouging consumers before the Act goes into play and changes the credit industry, introducing several prohibitions for a number of credit card company practices such as rate hikes on existing balances and fees charged for bills paid on time.
