Talk about an about-face.
The American Bankers Association, which fought tooth and nail against new restrictions on credit card fees and interest rates, issued a press release this week saying the changes “herald a new era” for consumers.
“Many practices that frustrated customers have been eliminated, and credit card users will now benefit from greater control and clearer terms for their accounts,” said Kenneth J. Clayton, senior vice president and general counsel for ABA Card Policy.
This from the same group that warned (in May) the restrictions could backfire, forcing banks to issue fewer credit cards with higher rates?
Maybe bankers welcome the reform because so many of them have managed to dodge it.
True, the rule approved by the Federal Reserve Tuesday generally prohibits issuers from raising interest rates on existing balances, but in many cases they’ve jacked rates up – way up, in some cases -- in anticipation of the rule taking effect Feb. 22.
The rule also requires issuers to give consumers 45 days advance notice of changes in the terms of a card, and give them the option to cancel the card before the changes take place. But if consumers choose that option, issuers can close consumers’ accounts or increase their monthly payments.