House Democrats to Seek Credit Card Rate Cap at 16%

Rep. Louise SlaughterUndeterred by similar stalled or failed efforts in recent weeks, several House Democrats say they will seek a credit card interest rate cap at 16 percent.
After the Thanksgiving holiday, they also will push for a limit on some “exorbitant and unnecessary” credit card fees.
“Watching how credit card companies have exploited people by increasing rates up to 30 percent and more is criminal and this bill will allow us to put an end to this,” said Rep. Louise Slaughter, D-New York, who is chairman of the powerful House Rules Committee.
Rep. John F. Tierney, D-Massachusetts, and Rep. Michael Capuano, D-Massachusetts, are co-sponsoring the so-called Renewing America’s Commitment to Consumers Act.
Last week, Senate Republicans blocked – a procedural move that effectively killed – a bill by Sen. Chris Dodd, D-Connecticut, that would have frozen interest rates on existing credit card balances for three months. That freeze would have ended with the Feb. 22 take-effect of new reform legislation that puts some limits on when and how credit card issuers can raise rates or charge fees.
But the Credit CARD Act of 2009, signed by Obama in May, does not go as far as regulating interest rates, and some legislators and consumer groups are now asking the Federal Reserve to bolster the CARD Act with tougher rules in the wake of recent credit card hikes to as high as 29.99 percent, and other unique fee structures introduced by the major card providers.
With this renewed populist wave of anger against the big credit card companies, the House Democrats hope to gain support across the political aisle.
In addition to capping credit card interest rates at 16 percent, the House action would:
•  Limit “exorbitant and unnecessary fees” such as membership fees or annual fees, and would cap any contingency fees (such as fees for late payments) at $15.00 per fee.
•  Ensure the “strongest protections possible” by not superseding any state law with a lower usury cap
One of the bill’s sponsors, Tierney said that “Americans of all ages” have had to depend more on credit cards to make ends meet during these tough economic times.
“What we recently have seen in response is that the credit card industry has seized this opportunity to unfairly and arbitrarily raise interest rates across more customer accounts than ever before,” Tierney said. “This legislation would end such exploitive practices and protect consumers.”
Next month, the full House is also expected to take up legislation to overhaul the regulatory oversight of the financial sector, which includes the top card-issuing giants: Chase, Bank of America, Citigroup, Capital One and American Express.
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