Financial Regulatory Forum

Freeze U.S. credit card rates, says Sen. Dodd

October 26, 2009

The entrance to a Capital One Bank is seen in New York  August 17, 2009. Capital One Financial Corp's U.S. credit-card defaults and delinquencies rose in July, sending shares down 4.7 percent in premarket trading, as more Americans lost jobs and struggled to pay their debts.  REUTERS/Shannon Stapleton  (UNITED STATES BUSINESS)   WASHINGTON, Oct 26 (Reuters) – Senate Banking Committee Chairman Christopher Dodd said on Monday he was introducing legislation calling for a temporary freeze on credit card interest rates on existing balances.The push for a freeze comes as Democratic lawmakers say some credit card issuers have jacked up fees to try to maximize their revenues before new rules kick in.

Dodd said his bill would immediately freeze rates on existing balances until the remaining provisions of new credit card industry regulations come into effect, which would be in February 2010 at the latest and possibly earlier.

“We worked long and hard to enact the safeguards included in” the new rules, Dodd said in a statement. “And no sooner had it been signed into law, but credit card companies were looking for ways to get around the protections this Congress and the American people demanded.”

Dodd’s bill arrived just days before an expected vote by the House of Representatives, possibly on Thursday, on a bill to advance by almost three months to Dec. 1 the effective date for strict new rules on credit card fees and interest rates.

The bill to accelerate the rules’ implementation was approved on Thursday by the House Financial Services Committee in a swipe at major card issuers such as Bank of America , Citigroup and American Express.

The new rules were approved by Congress and signed into law in May by President Barack Obama.
(Reporting by Kevin Drawbaugh; Editing by Andrew Hay) ((kevin.drawbaugh@thomsonreuters.com, +1 202 898 8390, +1 202 488 3459 (fax))) Keywords: CREDITCARD/DODD

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