Consumers hoping for relief from credit card interest rate hikes will have to wait a few months longer. On Wednesday, Senate Republicans put a “hold” on a bill to freeze credit card interest rates immediately, in order to avoid further rate hikes before February 22, 2010 when the new Credit CARD Act steps into effect. The hold on the bill effectively freezes it, and for the time being, prevents further debate and a vote on the measure.
The bill was co-sponsored by Senators Chris Dodd (D.-Conn), Chairman of the Senate Banking Committee and Mark Udall (D.-Colo) in response to recent consumer outcry over aggressive credit card rate hikes over the past six months. Under the new Credit CARD Act, which was signed into law in May of this year, credit card companies can only raise interest rates on existing credit card debt if the cardholder is more than 60 days behind with payments. Card issuers can still raise rates on future charges, but they would have to give cardholders 45 days notice of the rate hike.
Unfortunately, Congress gave credit card companies nine months to comply with the new curbs on rate increases. That gave card issuers plenty of time to jack up credit card interest rates across the board. According to a recent telephone survey by Rasmussen Reports, in just the past six months, half of Americans have seen interest rate hikes on their credit cards. That number may actually be higher, since 19 percent of those polled were not sure whether their rates had been raised. Only 31 percent said their interest rates had not been increased.
“We gave card issuers nine month to comply with the new laws, Senator Dodd said in his speech urging support for the new bill. “They have taken that window and used it to jamb in on consumers in this country, particularly at a time when consumers are losing their jobs, their home, their health care and retirement.”
In the beginning of November, a bill to move up the effective date for the new credit card legislation passed the House with strong support, 331-92. With the companion legislation now put on hold in the Senate, cardholders will likely have to wait until next year to get a break.
“This has been a classic case of David vs. Goliath situation,” said the co-sponsor of the bill, Mark Udall. “I say it’s time to take on Goliath and stop credit card companies from gaming the system at the expense of the American consumer.”
The Republicans, it appears, thought differently. The vote on the bill was blocked by Sen. Thad Cochran (R.-Miss), acting on behalf of other Republicans to stall the proposed legislation.
