Senator Chris Dodd of Connecticut has proposed a freeze on credit card interest rate and fee increases ahead of the implementation of new credit card regulations due to take effect in February. According to The New York Times, Senator Dodd’s goal is to prevent the “squeezing” of Americans. Perhaps such a measure should have been introduced 3 months ago, while the majority of credit card issuers were raising rates on a wide range of customers. Or, perhaps, two weeks ago, before both Wells Fargo and Citibank raised interest rates on what may be millions of Americans.
Citibank, which recently notified many of its customers that it would be raising interest rates to 29.99%, was not mentioned as reason for this initiative, though one has to wonder if the Citi rate increase was the straw that broke the camel’s back.
Unfortunately, like just about every piece of credit card legislation passed this year, Senator Dodd’s proposal will likely provide little, if any, benefit to consumers. Most credit card companies have stopped arbitralily raising rates and the most atrocious rate increase-Citi’s 29.99% fleecing-had already inflicted massive damage on the wallet’s of consumers.
In all likelihood, it is highly unlikely that any credit card company would pursue massive rate increases at this time, and Bank of America has already stated that it will no longer be hiking interest rates. Thus, Senator Dodd’s new proposal takes on the sickly smell of political posturing and may ultimately provide little benefit to anyone other than the Senator.
Clearly, a freeze on rate increases would surely provide peace of mind to many consumers. However, the rate increases that began when talk of a credit card bill accelerated along with the massive rate increases that followed the passage of this bill have left many of us with interest rates that can’t really go much higher.
Nonetheless, it would be rude not to thank our elected representatives for proposing legislation that was needed two weeks or two months ago. Of course, its a thanks for nothing.
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