As we've blogged here before, credit card companies are responding to the recession with unilateral changes to cardholders' accounts that many find unfair. Among those changes are interest rate hikes to as high as 30%, which are being applied even to cardholders with no history of payment problems. Columnist David Lazarus of the Los Angeles Times wrote March 15 that Senator Bernie Sanders, an independent from Vermont, has responded with a dramatic proposal: A bill that would limit interest rates on all consumer debt to just 15%. Sanders called his proposal, a direct response to the credit cards' recent rate hikes, "a national usury law."
The idea has precedent, Lazarus said. States are currently free to make usury laws -- which limit the interest a lender can charge -- and many have. However, credit card companies haven't had to comply with them since 1978, when the U.S. Supreme Court ruled that national banks could set their interest rates using the limits that their home states allowed. This triggered a race to set up shop in states with no usury laws at all. Meanwhile, federally chartered credit unions have always operated using an interest rate cap -- set at 18% since 1987 -- and Lazarus noted that they have survived.
Passing the bill would be an uphill battle against the financial industry and its supporters in Congress. But as a La Mirada debt settlement attorneys, we would welcome such a law. The recent interest rate hikes by credit card companies are partly a response to rising defaults by cardholders -- but another part is a response to financial problems in other divisions of the companies, including mortgage lenders. Raising interest rates, lowering credit limits and adding fees punishes cardholders for the bad bets those divisions made. This is especially unfair to cardholders who have no payment problems -- but whose credit score is harmed by the changes to their cards.
In our Southern California debt settlement practice, we help clients whose debt has spiraled out of control, in part because of high credit card interest rates. When interest rates are jacked up without reason or appeals, they raise the cardholder's minimum payment as well -- which can be overwhelming to someone who's already struggling to make payments. Our Placentia debt settlement lawyers help clients in this situation by negotiating a fair lump-sum payment to the card that ends their debt once and for all and helps them avoid declaring bankruptcy.
If this sounds like your situation and you know you need help, please Howard Law can tell you more at a free, confidential consultation. To schedule one, please contact us online or call toll-free at 1-800-872-5925.