New credit card bill called big win for consumers

NECN: Brian Burnell) - The U.S. Senate is preparing to pass a bill that will limit how much credit card companies can do when it comes to increasing interest rates. Its being called a big win for consumers.

The Moore family of Guilford, Connecticut, Samantha, Donald and their 3 daughters has become the poster family for credit card company abuse. Don and Samantha have been American Express cardholders for decades. In January they made their first mistake ever.

Samantha Moore, Guilford CT.: We were 3 days late in making a payment to American Express. As a result that American Express slashed our credit line from 32-thousand dollars down to 4-thousand-500, which was the exact amount that we owed them so they cut off our credit totally and they raised our interest rate from 12-percent to 27-percent.

Stories like that have flooded into Washington and prompted congress to act. Next week Senator Chris Dodd says the Senate will pass a bill that will prohibit companies from raising interest rates on existing balances, require 45-days notice of any rate increase and prohibit late fees if the company itself was late in processing an on time payment. Don is a small business owner and he says many business owners like him use their cards to keep their companies afloat.

Donald Moore, Guilford CT: In these difficult times he's using his personal line of credit to make payroll or get his business through these... It has a major negative impact on these small businesses.

Some bankers have argued against the bill saying it's a mistake because it will increase the cost of lending and reduce the number of people who will qualify for credit cards. Dodd's response?

Sen. Chris Dodd, D-Connecticut: Baloney. These companies talking about this. They've stopped issuing commercial loans because of how lucrative the credit card business is. This is a profit making business and I'm not interested in denying them a profit but they're not going to make outrageous profits at the expense of consumers.

One amendment that will not make it into the bill was proposed by Vermont Senator Bernie Sanders. He wanted a cap of 15 percent on credit card balances. It could happen eventually.

Sen. Chris Dodd, D-Connecticut: One of the provisions of this bill is to over the next 6 months to have a study done on the possibility of re-establishing an interest rate cap on various forms of credit across the country.

May 15, 2009