Obama met with credit card company executives on the heals of legislation passing the House.  The new law, a little late in coming, will go into effect in 2010 and will limit fees and prevent arbitrary interest rate increases.  The very thing companies have been doing to consumers for the past several months -- raising rates, adding fees.  Millions of consumers have been affected since this practice began in late 2007, making the credit card companies BILLIONS of dollars in additional revenue from the increased fees.

 

For instance, I have an account with Wells Fargo I use for emergencies.  When I got the account, the selling point was that the interest rate was based on the prime rate.  Meaning, if the prime rate went up, so could my interest rate for my card.  I have excellent credit and the interest rate was a good rate.   When the banking system dumped last year and the prime rate went down, I got a letter from Wells Fargo telling me that they were changing their terms and raised my interest rate 4%.  The prime rate went down.  Not up.  My interest rate, per my agreement with Wells Fargo, should have went down as well.  Needless to say, I payed off the small balance I'd been carrying and closed the account.  Their loss. 

 

I'm in a fortunate situation though.  Many Americans aren't.  I was able to pay the account off and tell them to shove it.  Many Americans can't do that.  I heard of one consumer who called their credit card company to complain about the doubling of their interest rate.  In retribution, the company reduced their credit limit to the current balance, effectively wiping out the credit line.  The reduction of credit appeared on their credit report, affecting their credit score.  I guess it's a negative thing to have your credit limit reduced -- even when it's done to punish a complaining customer.

 

I applaud the current administration for taking action, but it's like closing the gate after the cows get out.  It should have been passed as an emergency with a provision requiring companies to revert everyone back to where they were.  By the time the new law goes into effect, more credit card holders will see major increases in interest rates and fees.  Some customers have reported interest rates doubling, not only on new purchases, but on existing balances for purchases made under the old rates.

 

I guess we can hold out for hope.  Maybe the credit card companies will grow a conscience and realize that they're screwing the socks off of their customers.  Maybe they'll feel bad about it and voluntarily reduce rates and fees back to where they were when the credit card was issued to the consumer.  Oh wait.  These are the same companies that took OUR bailout money to save their companies and then gave themselves bonuses for a job well done. 

 

Nevermind.