In an effort to save consumers from rising credit card fees, Congress recently passed new rules aimed at keeping penalty fees in check. Unfortunately, a consequence of this well-intentioned move has been a subsequent rise in credit card interest rates.
In fact, it seems that credit card companies have simply raised costs elsewhere to compensate for profits lost due to the new regulations. This is unwelcome news for the millions of American credit account holders who have enough concerns on their financial plate.
Numbers reported this week by the Wall Street Journal reveal a disturbing trend in interest rates:
As a result of the new laws, credit card issuers claim they have less ability to raise penalty fees for customers who fall behind on the payments. In addition, rampant credit card debt in the wake of the recession has led to countless numbers of delinquent consumers.
Further, due to the 2009 Credit Card Accountability Responsibility and Disclosure Act, credit card companies now have less freedom to raise interest rates after consumers have signed up for a plan.
As a result of these factors, credit card companies feel constrained, and have responded by setting initial interest rates at a higher level.
The sponsor of the 2009 law that polices credit card companies, Rep. Carolyn Maloney, believes that the law still benefits consumers, even if it results in slightly higher interest rates.
The primary benefit, she claims, is that it removes surprises from the credit industry. In her words, it is better that “consumers should know up-front what the interest rate is, even if it’s higher, than to be soaked on the back end by tricks and hidden fees.”If, however, the new credit card laws have not helped you escape debt, consider speaking with a local bankruptcy< lawyer to learn your legal rights and opportunities. Personal bankruptcy may help you better manage your debt.