Bill would help trim credit card rates
WASHINGTON - Consumers who pay more in interest because they're behind on credit card bills could regain their older, lower rates if they pay on time for six months.
That's the agreement that was before the Senate yesterday, part of a broader package on credit card regulation. The bill is expected to pass this week, with President Obama's support.
The Senate Banking Committee's chairman, Chris Dodd, Democrat of Connecticut, had proposed a ban on retroactive rate increases. But without Republican support, his bill was considered unlikely to pass the Senate.
The latest proposal would prohibit lenders from increasing interest rates on past purchases unless the cardholder is at least 60 days behind. Lenders would be required to review a cardholder's terms every six months.
The Center for Responsible Lending estimates 10 million cardholders have seen their interest rates increase in the past six months for no particular reason.
The Senate bill would require that promotional rates last at least six months, prohibit rate increases in the first year, require lenders to give 45 days' notice before increasing rates, and mail bills 21 days before the balance is due, among other things.
The House passed its own version of the bill in April.