Connecticut Attorney General's Office

Press Release

Attorney General Calls On Banking Lobby To Urge Members To Reverse Credit Card Interest Rate Increases, Blasts It For Refusing To Explain Hikes

December 15, 2009

Attorney General Richard Blumenthal today wrote the nation's leading banking lobby calling on it to urge its members to reverse the huge arbitrary credit card interest rate and fee increases imposed on consumers to foil a new federal law.

Blumenthal also blasted the American Bankers Association (ABA) for declining to provide an explanation for the credit card industry's massive interest rate and fee increases, pushing rates as high as 30 percent.

Blumenthal's letter to the ABA comes the day after he sent letters to 11 of the nation's largest credit card issuers demanding they reverse the increases and restore rates and fees to January 2009 levels. He is also seeking from them detailed information on the increases as well as reasons for them.

"Consumers cannot afford another two months of these abusive tactics," Blumenthal said in the letter. "I write to urge that your organization embrace the spirit and intent of recent federal legislation and publicly and privately encourage your members to roll back increases in interest rates, fees, and finance charges on your customers' existing credit card balances to January 2009 levels, and cease additional increases.

"According to published reports, you declined to publicly comment on my demand that your industry stop gouging credit card customers. I am disappointed and dismayed by your failure to provide Connecticut consumers with any explanation for the unjustified and outrageous interest rate increases your members are imposing on consumers.

"I respectfully remind you that many of your members have survived only because of bailouts funded by the very consumers they are now gouging. Their ingratitude and cynicism is appalling. I urge you to do the right thing and ask them to stop."

In May, Congress approved sweeping legislation to halt abusive credit card practices, including interest rate hikes without cause on existing card balances. The new law only allows companies to increase rates on existing balances if consumers' payments are at least 60 days late. The law goes into effect in February 2010.

Since its passage, credit companies have rushed to increase arbitrarily and without explanation interest rates, locking in rates as high as 30 percent.

Sen. Christopher J. Dodd, D-Conn., who sponsored the bill, sought in November to freeze credit card interest rates until the effective date, but Sen. Thad Cochran, R-Miss., without explanation employed a parliamentary maneuver to block him.

Blumenthal said that the Federal Reserve is currently writing rules for the new law, which provides the Federal Reserve can order rate rollbacks if the increases between the bill's passage and implementation are unwarranted.