Credit Card Industry Slow to Embrace Reforms

   

Posted: May 14, 2009

Recent statistics suggest that the credit card industry is trying to take additional advantage of consumers before federal regulations reining in some of their practices go into effect next summer.

According to the Center for Responsible Lending (CRL), the top eight consumer credit issuers, who represent 80 percent of all U.S. credit balances, have been raising interest rates on more customers than usual and imposing higher penalty fees.

The activity comes in response to recent Federal Reserve protections that take effect next summer. The upcoming rules will limit abrupt interest hikes and unreasonable late fees as well as practices such as double-cycle billing. However, since the rules don't take effect until next summer, credit card companies have ample time to lock in some last-minute profits.

With that in mind, members of Congress have introduced bills, with the approval of the White House, such as the Credit Card Holder's Bill of Rights. The legislation would generally adopt many of the Federal Reserve's reforms, only at a quicker pace.

According to the CRL, no major credit card company has changed its policy of imposing interest-rate hikes at any time for any reason, nor have they loosened policies on late fees or allowed consumers to start paying down the most expensive parts of their balances first.