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Credit card companies should think twice before raising fees on responsible customers to compensate for new regulations, Sen. Evan Bayh said Wednesday.
Bayh stopped in Fort Wayne to discuss recently enacted rules to keep credit card companies from gouging customers. He said the rules will protect consumers, who have had to use credit more recently as the economy worsens. He relayed stories of people seeing their rates jump from zero percent to 29 percent because a payment was one day late.
“Middle-class Hoosiers have been getting ripped off by credit card companies,” said Bayh, D-Ind.
The new law prohibits those companies from raising interest rates on customers who faithfully pay their bills. It also has other protections, such as forcing bills to be mailed 21 days before they are due instead of 14 and requires the companies to give customers 45 days’ notice of an interest rate or other fee change.
Some critics have said the rules will hurt customers who pay their bills in full every month and have not yet had to pay finance charges. They argue that because the companies will make less money off bad customers, they will have to make more money on good customers.
Bayh didn’t think that would become reality. He said the credit business is highly competitive and if one company began charging its good customers, another company would try to lure those customers with better deals.
He also cautioned the industry against using such tactics, hinting that Congress might take another look at the law should the companies attack responsible customers.
“That is not going to be allowed to happen,” Bayh said of punishing people who pay promptly.
The new law will likely make it more difficult for some people “on the fringes” to get a credit card, Bayh said, but the senator noted that isn’t a terrible thing.
He compared it to the people getting mortgages they couldn’t afford. The law should make better informed consumers, he said, which will help people better handle credit.
