Card Issuers May Hike Charges And Interest Rates Before New Regulations Take Effect; Borrowers Who Pay In Full Targeted
CBS) The Senate passed a major reform of the credit card industry Tuesday that clamps down on arbitrary fee and interest rate increases. But even after President Barack Obama signs the bill, the law won't fully take effect for nine months. That's a nine-month loophole, and as CBS News business correspondent Anthony Mason reports, consumer groups are concerned the credit card companies will use the time to hike up interest rates and fees while they can.
At a credit counseling center in Dallas, calls for help are up 40 percent over a year ago. Many come from borrowers buried in credit card debt.
"It's amazing how much of the debt is actually fees and interest instead of principal," said Todd Mark of the Consumer Credit Counseling Service of Greater Dallas.
Comedians may joke about the banks - Stephen Colbert said this week that the card companies "simply change their rules and interest rates based on what the credit rule monkey spins on his rule randomizing wheel" - but they're not laughing on Capitol Hill anymore.
"They will go kicking and screaming into the night on this one," said Adam Levin of Credit.com.
Levin warns that lenders will use the nine months before the law in enacted to raise interest rates and hike fees.
During that time, he said, "We could face the continuing reign of terror."
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