A state legislator wants to bar Indiana from doing business with credit card issuers that charge interest rates he considers "unfair" and "exorbitant."
State Sen. Brandt Hershman, a Republican, introduced a bill last week that would prevent the Hoosier State from depositing money in institutions that issue credit cards with rates exceeding 21%. If such an institution already holds state deposits, it would be allowed to keep them until maturity but forbidden to accept any more. The provision would not apply to institutions acting as agents for credit card issuers.
"If these entities are issuing credit cards with unfair interest rates and forcing their consumers with good credit histories to pay unjustified charges, then these institutions should not be rewarded with taxpayer deposits," Hershman said in a press release. "Although the credit card industry is regulated by the federal government, I am working at the state level to do what I can to control unjustified increases."
For more than a year issuers nationwide have been increasing the rates charged on new accounts — and, when possible, raising rates on existing ones — to compensate for credit costs and for revenues they stand to lose as the Credit Card Accountability, Responsibility and Disclosure Act takes effect. CreditCards.com says the average rate on card offers nationwide rose to 13.17% last week, from 12.06% six months ago and 11.58% a year earlier.