Comments on: 29.99 Reasons to Get out of Credit Card Debt Now http://www.smartbalancetransfers.com/blog/2009/10/29-99-reasons-to-get-out-of-credit-card-debt-now/ The Balance Transfer Credit Card Resource Tue, 16 Mar 2010 20:47:28 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Deborah Johnson http://www.smartbalancetransfers.com/blog/2009/10/29-99-reasons-to-get-out-of-credit-card-debt-now/comment-page-1/#comment-6612 Deborah Johnson Mon, 04 Jan 2010 06:10:29 +0000 http://www.smartbalancetransfers.com/blog/?p=568#comment-6612 This is the response I got from the Board of the Federal Reserve Bank when I complained about Credit Cards raising Interest rates. From: CCS E-mail [mailto:FRB.Mail@frb.gov] Sent: Friday, October 23, 2009 4:42 PM To: ****rah ****nson Subject: Response to your e-mail concerning: Board Members Dear Ms. Johnson: Thank you for your recent correspondence in which you expressed your concerns about the increase of your bank credit card interest rates. As you know, the Federal Reserve finalized rules that are intended to enhance protections for consumers who use credit cards. The major provisions of the rules proposed in May 2008 under the Federal Reserve's Regulation AA (Federal Trade Commission Act) may be accessed using this link: http://www.federalreserve.gov/newsevents/press/bcreg/highlightscredit20080502.htm These rules pertain to unfair or deceptive practices regarding credit cards. The Board has strongly encouraged credit card issuers to comply with the final rules as soon as possible. For that reason, we share your concerns regarding the recent changes to credit card interest rates. However, based on the available information, it is unclear whether these changes are a response to the final rules or to increased losses caused by a combination of economic factors that negatively impact both consumers and lenders.We will continue to monitor this situation. Because the final rules will fundamentally alter the way credit cards are underwritten and priced, we believe that issuers must be afforded sufficient time for implementation to allow for an orderly transition process that avoids unintended consequences, compliance difficulties, and potential liabilities. Previously, an issuer could set rates based on a consumer's current risk of default, knowing that -- if the risk subsequently increased -- the rate could be adjusted accordingly. Since the final rules generally prohibit such increases with respect to existing balances, issuers will be required to account for risk in other ways, such as through improved upfront underwriting and more careful management of credit lines. Although these new standards will impact consumers differently, we believe consumers will benefit overall from more transparent and predictable credit card pricing. We are concerned, however, that shortening the implementation period could cause issuers to overreact, leading to additional increases in costs or reductions in credit availability for a larger population of consumers than would occur if issuers have sufficient time to carefully consider how to adjust their pricing. Again, thank you for writing. Please be assured that the Federal Reserve will continue to work diligently to find and implement the best and most sustainable solutions to the current economic challenges. Sincerely, JPD Board Staff This is the response I got from the Board of the Federal Reserve Bank when I complained about Credit Cards raising Interest rates.

From: CCS E-mail [mailto:FRB.Mail@frb.gov]
Sent: Friday, October 23, 2009 4:42 PM
To: ****rah ****nson
Subject: Response to your e-mail concerning: Board Members

Dear Ms. Johnson:

Thank you for your recent correspondence in which you expressed your concerns about the increase of your bank credit card interest rates.

As you know, the Federal Reserve finalized rules that are intended to enhance protections for consumers who use credit cards. The major provisions of the rules proposed in May 2008 under the Federal Reserve’s Regulation AA (Federal Trade Commission Act) may be accessed using this link: http://www.federalreserve.gov/newsevents/press/bcreg/highlightscredit20080502.htm These rules pertain to unfair or deceptive practices regarding credit cards.

The Board has strongly encouraged credit card issuers to comply with the final rules as soon as possible. For that reason, we share your concerns regarding the recent changes to credit card interest rates. However, based on the available information, it is unclear whether these changes are a response to the final rules or to increased losses caused by a combination of economic factors that negatively impact both consumers and lenders.We will continue to monitor this situation.

Because the final rules will fundamentally alter the way credit cards are underwritten and priced, we believe that issuers must be afforded sufficient time for implementation to allow for an orderly transition process that avoids unintended consequences, compliance difficulties, and potential liabilities. Previously, an issuer could set rates based on a consumer’s current risk of default, knowing that — if the risk subsequently increased — the rate could be adjusted accordingly. Since the final rules generally prohibit such increases with respect to existing balances, issuers will be required to account for risk in other ways, such as through improved upfront underwriting and more careful management of credit lines.

Although these new standards will impact consumers differently, we believe consumers will benefit overall from more transparent and predictable credit card pricing. We are concerned, however, that shortening the implementation period could cause issuers to overreact, leading to additional increases in costs or reductions in credit availability for a larger population of consumers than would occur if issuers have sufficient time to carefully consider how to adjust their pricing.

Again, thank you for writing. Please be assured that the Federal Reserve will continue to work diligently to find and implement the best and most sustainable solutions to the current economic challenges.

Sincerely,

JPD

Board Staff

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