More Credit Card Protection Sought From Fed

Associated Press
July 21, 2010
Aversa, Jeannine

Sens. Charles Schumer (D-N.Y.) and Tom Harkin (D-Iowa) are calling on the Federal Reserve to provide more protection to credit card users to prevent exorbitant interest rates for those who fall behind on payments. "Credit card companies can still double or triple the interest rate when a consumer falls two months behind on payments" despite new Fed rules, the pair explained in a letter to central bank head Ben Bernanke. They are seeking to alter the rules slated to take effect in on Aug. 22 and will seek legislation to compel the Fed to do so if it does not act voluntarily at their urging. Congress directed the central bank to implement new rules last year, and the Fed interpreted the law as covering fees and charges but not interest rates. The new rules bar credit card issuers from charging a penalty fee of more than $25 for late payment, prohibit them from charging penalty fees higher than the dollar amount associated with the violation, and ban inactivity fees.

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