WASHINGTON – House leaders, frustrated with a growing number of banks raising credit card interest rates in advance of the new credit card law restricting such rate hikes, introduced a bill yesterday to move up the effective date of the new law 90 days to Dec. 1.
The bill, however, would not affect the effective date for a provision targeted by credit unions that would lengthen the payment period on credit card bills.
The bill to change the Credit Card Accountability, Responsibility and Disclosure Act, known as the CARDAct, was introduced by House Financial Services Committee Chairman Barney Frank and Rep. Carolyn Maloney, the New York Democrat who sponsored the CARDAct.
"It’s clear that credit card companies are taking advantage of this period between the signing of my bill and the current effective date," Rep. Maloney said. "The breadth and depth of the rate hikes happening now point to the need for faster consumer protections."
The proposed changes come after major card issuers have been pushing through a variety of recent interest-rate increases and fees. In recent months, for example, American Express Co., J.P. Morgan Chase & Co.'s Chase Card Services and Bank of America Corp. have raised interest rates by several percentage points, converting customers' fixed rates to variable ones, and pushing through higher rates and fees for cash advances and late payments. Discover Financial Services, for example, recently started notifying cardholders that it will increase its balance-transfer fees to 5% from 3%.
