April 13th, 2010 
Kathryn Evans 
Recent legislation aimed at protecting consumers from unfair credit card practices may have spurred some companies to increase interest rates last fall.
A wave of provisions effective this summer will require them to review these rate hikes as well as any others made since January 1, 2009, in order to ensure they are appropriate. This may not be enough to make up for losses incurred before passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, according to a recent release by Consumers Union.
Many of these losses were suffered by consumers who had made payments on time, according to the release.
“The Fed should undo that damage by requiring banks to lower interest rates for customers who were treated unfairly before the new credit card protections went into effect,” said Lauren Bowne, staff attorney for Consumers Union.
To do this, the organization suggested mandating that lenders begin rate reviews on August 22, when the third wave of the Credit CARD Act takes effect. The current law allows them to wait six months before beginning this process. They should also disclose their methodology and revert to old interest rates if the increases would be prohibited under the current law.
Connecticut Attorney General Richard Blumenthal also criticized the law and proposed eliminating inactivity fees, disproportionate penalties and multiple fees for a single violation.
“The [Federal Reserve Board's] aversion to consumer protection is most clearly evidenced by its failure to fight interest rate increases that credit card issuers unfairly and arbitrarily imposed on consumers – even some of their best customers who fully honored their credit card agreements – before the CARD Act’s effective date,” Blumenthal said.
The first wave of the Credit CARD Act prohibited interest, term and fee hikes without 45 days’ notice.
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Tags: Act, Credit Card