Hodes: Credit card rules must take effect sooner

By HOLLY RAMER

posted: 40 DAYS 5 HOURS AGO

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CONCORD, N.H. -Rules aimed at protecting people from sudden hikes in interest rates on credit cards should take effect ahead of schedule, U.S. Rep. Paul Hodes, D-N.H., said Thursday.

Legislation that President Barack Obama signed in May would generally bar rate increases during the first year after an account is opened. It also would ban — with a few exceptions— increasing the rate on existing credit card balances.

The rules are scheduled to take effect in late February, but Hodes said he supports a bill filed last month by New York Rep. Carolyn Maloney that would change the effective date to Dec. 1.

Hodes, a member of the House Financial Services Committee, said he has heard from more than 1,200 New Hampshire residents who have had the interest rates on their credit cards raised or the terms of the contracts changed.

"The intent in the legislation was to give credit card companies an opportunity to put into place the administrative and clerical practices they need to do to adjust to the new regulations. Unfortunately, they've abused the time they've been given," Hodes told reporters during a conference call that also featured a Dartmouth College professor who said his credit card company arbitrarily raised his interest rate and lowered his credit limit.

Karl Griswold said he carried a significant credit card balance years ago while he was paying for graduate school, but always made payments on time. In March, his interest rate went up by 3 percentage points, and in July, his credit limit was decreased by more than 20 percent.

He said he was told that because he had been paying down his debt, he was no longer using a sufficient fraction of his credit limit. He said his bank is "arbitrarily" damaging his credit score and hurting his ability to buy a home.

"And it's not because I've made a late payment, it's not because I've violated any terms of my contract. It's simply because they're not making enough money off of my account," Griswold said.

2009-10-15 17:28:54