Rate Jacking – Legal Theft

William;

I agree that Yingling has a good point.

I'll probably post a blog entry on this later, but I think the Fed made a serious mistake (from the cardholder point of view) by making the new regulations effective in 18 months. I think it should have been much sooner.

The banks are using the excuse that they need even more than that to rework their business model. I don't buy it. How much time do they need to stop jacking up interest rates on existing balances? None. They just stop. I'm sure there are fiscal ramifications to that but I'm also quite sure that the issuers are capable of handling it.

I predict that we're going to see rate hikes of just about every one of their rate structures. They'll get it done while they can. In that regard, the Fed is not protecting the consumer one iota.

While I'm all for tightening the screws on the credit card industry, Ed Yingling has a good point:

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"Every proposal needs to be looked at in terms of its effect on credit availability," said Ed Yingling, president of the American Bankers Association. "They need to be concerned that on the one hand they're encouraging banks to lend more and on the other hand you have a series of policies that tell banks to lend less."
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And this JUST hit the wires:

http://www.washingtonpost.com/wp-dyn/content/artic...

Today's move by Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration is the first of what could be many attempts to further regulate the industry, as several members of Congress plan to codify the Fed's regulations next year and perhaps pass even more stringent rules. Under these rules, after 2010, the issuers will no longer be able to raise rates on existing balances unless the cardholder is a late payer.

**Dave:

**So, let me get this straight. It’s theft to charge a price that makes a business viable? **

Not if it's reasonable. You try jacking your rates by almost 100% and see what happens to your business. And there's the timing issue with the bailout.

**And I’ve yet to see any card company resort to eliminating the grace period. You can still get the loan for free even with the increase.**

Yes you can and if you're one of them, you're in good shape. But that's a small percent of cardholders. Most cardholders are in up to their eye sockets. More importantly, it's the principle of lending at one fee and then jacking up the interest rate almost 100%. And, for the record, there are issuers that are shortening the grace period.

So, let me get this straight. It's theft to charge a price that makes a business viable?

And I've yet to see any card company resort to eliminating the grace period. You can still get the loan for free even with the increase.

They may actually be making some of the other credit card options more viable.