Senate To Consider Relief For Credit Card Holders

A Senate Judiciary subcommittee is hearing arguments this morning on a bill that would provide more immediate relief for debt-ridden credit-card customers who have high interest rates. The bill would hasten the implementation of regulations that are supposed to go into effect in July 2010. From the Washington Post:Sponsors say the bill gives consumers with high interest rates and on the verge of financial collapse a powerful tool to negotiate a lower rate with their credit card companies. Under the bill, lenders with high interest rates would get nothing if their customers file for bankruptcy.The bill would apply to rates higher than 15 percent plus the current yield on the 30-year treasury bond. That rate currently is 18.5 percent.Read that closely. This bill, if adopted, would hammer card issuers if a customer with an interest above 18.5% files for bankruptcy. From the article:”The added risk that such products will not be recoverable in bankruptcy will simply result in their withdrawing from the market,” John said. “The products will become too risky for reputable financial institutions to offer.”Certain other reputable lenders will continue to offer products to these borrowers, and may even lower their fees,” he added. “But they will increase the requirements to qualify for such loans in a way that will reduce the number of potential customers.” I think it’s tough to argue with David C. John on this one. As it relates to this particular bill, I say this to consumers: be careful what you wish for. This one could sting.