Monday, Oct. 12
Posted 9 a.m. EST
Bankrate reporter Leslie McFadden contributed this entry.
A letter sent Wednesday by 18 members of Congress to credit card issuers asked them not to raise interest rates on accounts before credit card reforms go into effect Feb. 22. The Credit Card Accountability, Responsibility and Disclosure Act was signed into law last May, and is rolling out in three phases. Among other changes, the law cracks down on rate hikes applied to existing balances.
The letter referenced the example of Bank of America, which announced Tuesday that it wouldn't raise the rates of its credit card customers. Discover Financial Services followed suit Thursday, and pledged a freeze on their cardholders' interest rates and until the rest of the CARD Act provisions take hold.
Meanwhile, Wells Fargo reported this week it will raise the interest rates on most of its credit cards by 3 percentage points. Even if legislation passes to expedite the implementation date for the CARD Act to Dec. 1, the new rate would still beat the effective date of the rules by one day. Higher rates for Wells Fargo customers kick in Nov. 30. Cardholders have 45 days to opt out of the new rate. The move will close their account but allow them to pay their balance at their current APR.
Wachovia Corp., purchased by Wells Fargo, has said its cardholders won't be subject to the rate increase.
The rate freeze declarations won't mean much to folks who have already seen their rates jacked. About 19 percent of consumers say their interest rate has gone up, according to a June 2009 survey by Credit.com.
Advertised rates for new accounts climbed an average of 20 percent during the first six months of the year, according to a report from the Pew Charitable Trusts.
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