The CARD Act of 2009, limiting many abusive practices of the credit card industry, goes into effect in February. However, as we have previously reported, the credit card industry is slithering around many of the new law and is still finding out more sneaky ways of ripping off American debtors. Even in the months before the law is implemented, many credit card companies have already introduced new "rules" that effectively allow them to hike interest rates and/or add outrageous fees despite the CARD Act.
In response to the credit card industry's attack on this CARD Act, legislators are now looking into new legislation that would place a cap on the credit card interest rates at 16 percent. Of course, most credit card industry "experts" claim that such a law would bring lending to a screeching halt. Do you believe it!
Here are three reasons why credit card interest rate and fee caps are good for America:
- High interest rates and outrageous credit card fees are keeping the poorest Americans on a credit card debt treadmill that they cannot escape. The poorest and least educated Americans do not understand the complex financial and legal language used in credit card agreements and become vulnerable to credit cards with high interest rates and expensive fees. There are credit cards specifically designed to prey on these very vulnerable Americans. An interest rate and fee cap would put those vultures out of business.
- Many credit card companies "bait and switch" debtors who have average to low credit scores with so-called introductory rates. Unfortunately, those "introductory rates" don't last and often skyrocket up to 20 percent or more. With interest rate caps, credit card debtors would be secure in the knowledge that their interest rate could never exceed a certain percentage.
- Many credit card companies are already working around the new law by raising fees and changing the language of their contracts. Because of this many unfortunate debtors are about to experience a serious "shock" when they see "new credit card rules" become effective before February that will in essence hike their fees or interest rates to credit card companies. At least with a credit card fee cap, we can leverage the playing field.