Udall loses on credit card interest-rate freeze to GOP Grinch
Mark Udall made a commendable effort to keep the banks and credit card companies from raising interest rates and fees again before the Christmas shopping season starts in earnest. His bill was stopped by a single Republican senator.
“Families and small businesses are hurting during these tough times,” Sen. Udall said, “and I find it unconscionable for credit card companies to game the system and jack up already high interest rates even higher.”
Sen. Michael Bennet released a similar statement. “Hard-working families continue to get hit by unfair interest rate hikes as credit card companies make a last-ditch effort to turn a profit,” he said. “Colorado families need relief from these practices, and they need it now.”
Udall’s bill follows the defeat of one he co-sponsored with Sen. Chris Dodd to freeze credit card interest rates immediately until the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act) takes effect in February 2010. Republicans used a “procedural trick” to keep the issue from coming to a vote in the Senate.
The Credit CARD Act will “institute common sense pro-consumer reforms like requiring advance notice of interest-rate increases, banning the practice of universal default and protecting young people from unscrupulous lending practices,” Udall said.
Other provisions of the act require written notice of interest rate increases and prohibit increasing interest rates on existing balances or charging interest on accounts already paid. It also extends to 60 days the period for which interest can be raised for missing payment.
The Credit CARD Act was signed by President Obama last May. But, in order to allow time for the credit card industry to adjust to the new rules, implementation was delayed until February of next year.
To the annoyance of congressional Democrats, the industry used the delay as an opportunity to raise interest rates, cut credit limits and raise transaction fees for balance transfers and cash advances. Rather than curtailing credit card abuses, the industry used passage of the act as an opportunity for revenue enhancement.
“This is a common practice and will continue to be common, because issuers can do these things for really no reason until February,” said John Ulzheimer, president of consumer education for Credit.com, which tracks the industry.
When it became apparent that the credit card industry was planning a new round of interest rate and fee increases before the December shopping rush, Udall joined Sen. Dodd to introduce a bill to freeze interest rates on credit cards until the Credit CARD Act takes effect in February.
Senate Republicans used a “procedural trick,” according to Udall, to keep the bill from even coming to a vote.
In the meantime, the House had passed a stronger bill that would move the effective date for the entire Credit CARD Act to Dec. 1 of this year.
In a final attempt to protect consumers from a drastic increase in credit charges before Christmas, Udall introduced a Senate version of the House bill.
It would have needed unanimous consent from the Senate to move forward. Lack of unanimous consent would kill the bill.
Once again the GOP played the Grinch to spoil Christmas. Sen. Thad Cochran of Mississippi objected “on behalf of several senators on this side of the aisle.” He put a “hold” on the bill that, under Senate rules, effectively killed Udall’s bill by preventing a vote on it.
Consumers using credit cards for Christmas shopping are forewarned: Expect sticker shock when the bills come due in January. That’s when the credit card companies and the Senate GOP Grinches will celebrate their Christmas surprise.
Congressional Republicans may not want to raise your taxes, but when it comes to raising your credit card interest rates, they are shameless.