House Dems: Cap Credit Card Rates at 16%, Fees at $15

Rep. Louise SlaughterTwo House Democrats have introduced a bill to cap credit card rates at 16 percent and penalty fees at $15, despite the failures of previous attempts to freeze rates ahead of reform laws set to take full effect in February.
Rep. Louise Slaughter, D-New York, chairwoman of the House Committee on Rules, announced that she and Rep. John Tierney, D-Massachusetts, are sponsoring the bill to limit “unreasonable fees on credit card accounts and provide much needed relief to consumers, who in some cases, are facing 30 percent interest rates,” a statement by the two lawmakers said.
Democratic lawmakers for weeks have been more outspoken than Republicans in voicing criticism of major credit card issuers for raising rates and fees, lowering credit limits or closing underused accounts.
The actions by the card issuers are in response to the sweeping Credit CARD Act of 2009, signed in May by President Obama, but set for full enforcement on Feb. 22. The Act places restrictions on card issuers on when and how they can raise rates, impose fees or modify cardholder policies.
On Nov. 18, Republicans thwarted a similar credit card rate freeze bill in the Senate. Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, supported legislation to freeze rates until the law’s implementation in February. Dodd’s attempt to pass the bill by unanimous consent was blocked by Senator Thad Cochran, a Mississippi Republican. The move by Cochran, in effect, killed the Senate bill.
In the House, Slaughter’s Rules panel sets the daily floor schedule. She said a hearing on the rate cap would be held “as soon as possible.”
Under the proposal by Slaughter and Tierney, the Truth in Lending Act would be amended to create a “National Consumer Usury Rate,” which provides that the annual percentage rate (APR) “for an extension of credit or outstanding balance on any credit card account may not exceed 16 percent.”
The bill allows the Federal Reserve to make adjustments to the maximum APR in the cap when it is “in the public interest and economic conditions warrant.”
The bill puts a limit of $15 on penalty fees, such as “late fee, creditor-imposed not sufficient funds fee, over-draft fee, and over the limit fee, or other charge that a credit issuer may impose.”
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