February 14,2009
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CC Problems resolved w/Sen. Dodd's Bill, Pt.1
List of outstanding problems.Dodd had already introduced this legislation, titled: "the Credit Card Accountability, Responsibility and Disclosure Act" last year. The Federal Reserve with recently released new, similar regulations has already mandated most of the provisions. So, why this seeming redundancy of Congress repeating the same steps? The reason is that nothing's being done today The new regs aren't scheduled to take effect till July of next year, which means they won't be enforced until July of 2010. Credit card consumers are hurting now and there seems to be nothing to assuage the situation of credit card industry's abuses that have become so commonplace as of recent. Right now, the regs have no ‘teeth'.
The senator believes that we need a bill that addresses such matters as:
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Universal default;
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Retroactive interest rate increases;
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Unfair payment allocation practices;
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Charging interest on the fees imposed;
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Multiple fees for exceeding credit card limits;
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Double-cycle billing;
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Marketing credit cards to youth;
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Other areas the federal rules cover either incompletely or not at all.
Sen. Dodd states "When consumers pay a price, the economy pays a price," adding that his legislation would stop the "outrageous gouging" that is occurring in the credit card system right now. He states the bill's purpose with: "There's no prohibition and I think there ought to be." Some of the major components of the bill are:
Arbitrary rate hikes: Without doing anything wrong, millions of credit card consumers are having their interest rates jacked on existing balances. Sen. Dodd is very concerned with the wide abuse today in the practice of arbitrary rate hikes on existing balances across the board without individual justification. A consumer can have a perfect record in responsible credit card behavior but be a card holder of a certain type of account and have a substantial rate hike because of the type if account. That person is expected to pay someone else's penalty because of group-wide changes. Dodd contends that terms of an original agreement should be honored and respected.
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