Consumer Action Reacts to Federal Reserve Credit Card Rules

Contact: Contact: Linda Sherry (202) 544-3088, .(JavaScript must be enabled to view this email address) (301) 718-2511, Joe Ridout (415) 777-9648

Statement of Linda Sherry, Director of National Priorities, Consumer Action Today, the Federal Reserve will issue groundbreaking rules to address unfair and deceptive practices by the credit card industry. The rules contain unprecedented protections for cardholders. We anticipate that the Board will allow 18 months for implementation of the new regulations. This is a grave misstep in an otherwise stellar consumer-protection rulemaking. The U.S. is experiencing the worst economic conditions in decades. Unprecedented debt loads are crushing many families. The Board has given banks another year and a half to continue indiscriminate interest rate increases on consumers with historically high credit card balances. When they can least afford it, cardholders will be vulnerable to the piling on of unconscionably high finance charges. This may be the straw that breaks the camel’s back. The credit card industry has wailed about how the new rules will exacerbate the credit crunch, eliminate low teaser rates and make it difficult for many people to access credit. Under the new rules, the card companies have not lost the ability to manage risk — they are still allowed to increase prices going forward or cut back on credit limits to reduce losses. Nothing in the rule changes this. Consumer Action is pleased that the Fed has taken this step to provide substantive protections to cardholders. Now, we urge Congress will fill in the blanks and pass strong laws next year that will protect cardholders from universal default (raising rates for reasons unrelated to the account), excessive and unreasonable fees, and “any time any reason” changes in terms that leave cardholders in a constant state of insecurity.
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Consumer Action, founded in 1971, is a non-profit education and advocacy organization headquartered in San Francisco with offices in Los Angeles and Washington, DC. Our annual Credit Card Survey compiles rates and terms on cards offered by major issuers. Click here to go to our 2008 survey.
 
 

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