This has been a good week for those of us who would like to see the credit card industry behave a little nicer.
On Wednesday, a House committee approved the Credit Cardholders' Bill of Rights. It protects against rate increases on existing balances, sets limits on fees and things like that. It could be up for a vote as soon as next week.
Then on Thursday, there was a proposal in the Senate to freeze credit card interest rates on existing balances until stricter rules are in place. Oh, and the president called a bunch of the card execs -- Visa, MasterCard, Chase, Discover, etc. -- to the White House for what my mama would have called a "Come to Jesus meeting."
All this is happening now because the credit card industry got greedier. The Federal Reserve came out with new rules on interest rates and said they'd go into effect next year. The card companies looked at the new rules and started raising rates and fees to make sure they still got what was coming to them -- and a good bit more. And they're still at it.
For example: In June, Bank of America will increase interest rates on people who carry a large balance and have an APR that is less than 10 percent, reports Bill Hardekopf, CEO of LowCards.com, which follows the industry. The bank also is increasing its fee for balance transfers, cash advances and ATM advances from 3 percent to 4 percent.
"In today's environment, if customers do anything that shows they are a greater risk, they are extremely likely to see their interest rate increased or their credit limit decreased very quickly," Hardekopf said.
I particularly like that some in the Senate want to stop these increases. But the card industry is taking no chances. In addition to upping interest rates and fees, it also has been lobbying Congress to dump those Fed rules. The argument that I read that really set me off: Any new government rules and restrictions could crimp consumer credit just when families need it most.
May I say bull?
Every time I write about credit cards, I hear from someone who says people shouldn't get in debt in the first place. I agree: Pay your bills, don't carry a balance and don't charge more than you can pay are all good rules to live by -- just like flossing after every meal, but my dentist tells me people don't always do that either.
In this case, I'm just listening to the card companies' rhetoric and it's obvious they're not interested in those people who pay their bills on time. When do families need credit the most? Usually when there's no cash to buy the groceries or pay the bills. Charging is a temporary fix at best. There are other resources families can turn to that don't charge 25 percent interest and late fees.
And as Hardekopf said, anything to increase your risk right now -- when no new rules are in place -- is a bad idea. The things that increase your risk -- missed payments, late payments, exceeding your credit limit or even using too much of your credit line -- are all possibilities when families are crunched.
So how likely are we to see change? I'll be hopeful. On Thursday, Obama made it clear he wants to sign a bill that:
Stops sudden interest rate increases.
Prohibits excessive fees.
Requires use of "plain language," and no more fine print.
Provides effective oversight and enforcement of laws governing the credit card industry.
On that last item, remember the mortgage industry had rules too. So call me hopeful but still skeptical.