Higher Interest Rates? Treasuries, Jobs Report Big Factors

An employment report that sees the most jobs gain since March 2007 and the yield on the benchmark 10-year Treasury note climbs to 3.94 percent, the highest since June. Those two major indicators that emerged Friday can possibly signal the return of higher interest rates on mortgages and other consumer financial products later in the year. But the Federal Reserve’s monetary policy holds the most influential piece of the puzzle.

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Credit Card Issuers to Be More Accountable for Rate Hikes

In new rules disclosed today, the Federal Reserve is proposing to make credit card issuers more accountable by requiring them to provide as many as four reasons for every interest rate increase.
The Fed may also require rate-hike reviews every six months, but is soliciting comments from the industry that might set a long-term deadline for discontinuing a customer’s ongoing review process.

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Reform May Keep Credit Card Debt at Downward Pace

Consumers are using their credit cards less or paying of their balances more at an historic pace, according to the latest figures from the Federal Reserve’s monthly snapshot of borrowing trends. And on Feb. 22, equally historic restrictions on interest rate hikes will take effect with credit card reform’s focus on protecting consumers’ outstanding balances. Revolving credit, or credit card balances, fell $8.5 billion, or 11.7 percent, to $866 billion in December, the 15th-consecutive monthly decline, the Fed reported.

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Yet Another Bill to Cap Credit Card Rates is Doomed

The latest attempt by Democratic lawmakers to cap credit card interest rates in light of self-advantageous actions by card issuers is scheduled for Jan. 27, but this attempt is likely headed for the same fate as others have in recent months – defeat. Even some Democrats might join Republicans in seeing the latest attempt for a rate limit as detrimental to small businesses and the overall economy. They will point to the Federal Reserve’s report this week that consumer credit took a record plunge of $17.5 billion in November – the largest drop since the Fed began keeping records in 1943.

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Lawyer on TV: I'm Not Paying My 28%-Rate Credit Card

San Diego Lawyer Ben Pavone went on the CBS Early Show and said sternly that he will not pay his Bank of America credit card bill because the bank suddenly raised his rate to 27.99 percent and cut his spending limit. And Pavone said he will sue BofA if it puts a negative mark on his credit reports. “Bank of America did not give an explanation,” he said. “I guess they will have to explain themselves in court.”

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Credit Card Foe Blumenthal to Seek Senate Seat

Connecticut Attorney General Richard Blumenthal, who is crusading against interest rate hikes by credit card issuers, said on Wednesday that he intends to run for fellow Democrat Christopher Dodd’s seat in the U.S. Senate, boosting the likelihood of keeping a voice for credit reform in the Senate. On Monday, Blumenthal called a news conference to announce he has asked Federal Reserve Chairman Ben S. Bernanke to order credit card companies to revert to their interest rates of a year ago. Banking industry officials responded with a warning that such regulation could make access to credit even tighter.

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Credit Reform's Rate Relief Overdue, But Limited

So much has been debated and criticized about the credit card reform laws set for full effect Feb. 22 that the sizzle the legislation initially sparked has fizzled. Nonetheless, the interest rate relief and other provisions in the landmark Credit CARD Act of 2009, signed into law by President Obama in May, goes further than any other expansion of consumer credit regulation. The biggest point of contention in the reform is what it does or doesn’t do to help credit card customers deal with sudden, unfair and inconsistent hikes in interest rates that have become pervasive in recent years – and more so in recent months.

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

Two 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.

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Report: Credit Cards Deploying 'Pick-A-Rate' Tactic

Credit card issuers are deploying a new tactic ahead of reform laws in February – dubbed “pick-a-rate” – that uses the highest prime rate in a 90-day period, instead of using the customary “last day of the billing cycle,” according to a consumer watchdog’s new report. In effect, the larger time-period window gives credit card issuers the option of pegging a cardholder’s interest rate to a higher prime rate, said the Center for Responsible Lending, the nonprofit consumer group that focuses on household finance issues.

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