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Credit Card Rates Hiked Yet Again Before CARD Act Consumer Protections Take Effect

August 20, 2009

The first of the new rules for credit card companies under the 2009 CARD Act take effect Aug. 20 -- and consumer advocates say interest rates have been hiked dramatically to compensate, ABC News reported Aug. 18. Credit card companies downplayed the change, denying that it was driving credit card rate increases or saying it was just one of many factors, including a bad economy that's causing a record number of defaults and consumer bankruptcies. Consumer advocate Samir Kothari, co-founder of, disagreed, pointing out that it makes economic sense to find new revenue sources when you expect to lose an old one.

Regardless, the article said, interest rates grew dramatically in the first seven months of 2009. In fact, a study found that some cards have raised their interest rates for purchases and balance transfers by as much as 50%. The rate hikes apply to all borrowers, regardless of whether they've missed payments or have a history of irresponsible behavior. Opposition to these practices was part of what drove the CARD Act, most of whose provisions take effect next February. Among the rules that start Aug. 20, however, is one requiring the cards to send out bills 21 days before they're due, up from 14 days, which is expected to reduce late fees caused by delays in the mail. Another new rule triples the amount of advance notice cardholders get before a rate hike, bringing it to a total of 45 days.

As Orange debt settlement attorneys, we applaud efforts to increase the spotty regulatory oversight of the credit card industry. The new rules taking effect Aug. 20 will help many cardholders avoid going even deeper into debt, which will ultimately help them avoid defaulting on their card payments or going into bankruptcy. However, we believe more could and should be done to check the worst excesses of the card industry. As we have written here before, cardholders with no history of lateness or over-the-limit spending have recently found their credit ratings hurt by credit card companies' belt-tightening, including lowered credit limits and penalties for shopping at the same stores as less responsible cardholders. These practices ultimately hurt the cards as well as the cardholders by putting them in financial stress that encourages bankruptcy or debt settlement.

At Howard Law LLP, we help clients who feel that they're in over their heads with credit card debt or other debt. Our San Bernardino debt settlement lawyers help clients strike a deal with creditors to end the debt -- and the harassing phone calls -- with a lump-sum payment. Generally, creditors are willing to take a payment of less than you owe in exchange for a guarantee that they will receive something, which they may not if you are forced to file for consumer bankruptcy instead. Our Fullerton debt settlement attorneys can also advise you about the financial consequences of settling, including possible effects on your tax bill and credit rating. We believe our job is to guide clients toward the best possible financial moves for them, whether that means settling with creditors, filing for bankruptcy or suing harassing creditors for predatory lending or fair debt collection law violations.

If your debt is becoming an overwhelming burden and you're ready to look for a responsible way out, Howard Law can help. To learn more at a free, confidential consultation, please contact us online or call 1-800-872-5925.