When it comes to consumer rights, legislators know a thing or two about protecting borrowers from usurious practices of lenders. At least that is what they have shown this year, by pushing credit card reforms amidst strong opposition from lobbyists and banks. Unfortunately, they were not able to warn consumers about the consequences of tighter regulations, such as sudden interest rate hikes. Banks have also been drastically trimming down debt limits of consumers and writing off many cardholders to minimize risks and avoid losses as they prepare to cushion the impact of full implementation of the CARD Act. However, legislators say banks are gouging on remaining time before new regulations take full effect, the reason why they plan to move the effectivity date up by almost three months.
Several senators in the House Committee are pushing a bill that will move full implementation of new credit laws from Feb. 22, 2010 to Dec. 1 this year. Legislators say they aim at stopping rates and fees by banks which have continually increased since new regulations were signed. A Democrat representative from New York have given banks and other creditors the time that they were asking for, but the federal government can no longer continue doing so because of their abusive practices.
The House Financial Services committee passed the bill on a voice vote. Other senators are pushing a bill to freeze credit card interest rates until the new legislation takes effect Feb. 22, instead of actually moving the effectivity date. Authors of the bill say they have worked long and hard to protect consumers, but no sooner was the Credit CARD Act passed when banks started to get around the protections the Congress have given to American consumers.
However, political analysts say the passage for either bill is unlikely, especially that they are not identical. Critics added that some legislators are in it to gain popularity among consumers instead of actually pushing a bill that will actually get legislation enacted quickly.
Meanwhile, the public remains outraged with credit card companies as they continue to hike rates and write off potentially risky clients. On Tuesday, Pew Charitable Trusts reported that interest rates rose by 23 percent from December 2008 to July 2009.The non-profit organization also noted that banks are engaging in practices which would be prohibited next year, such as increasing penalty rates on clients who are just barely late on their payments. Starting February 2010, credit card issuers can only hike penalty rates if a client is more than two months late.