Sweetheart Deal

Greedy investors on Wall Street, weak regulations and oversite by our government has caused the current economic melt down.

It’s not good financial sense to use credit cards to pay for living expenses. However, because of our current economic situation many American’s have been pushed to overuse their credit cards in order to survive. Tough new Federal Reserve rules should keep banks from abusing, what has become the last financial lifeline for many Americans, their credit cards.

Last May, Fed Chairman Ben Bernanke described the problem: “Creditors now can reserve the right to increase interest rates at any time and for any reason and apply the new rate to purchases the consumer has already made. Likewise, when consumers accept low-rate promotional offers, they do not expect card issuers to allocate their payments to minimize the benefits of the offer and maximize interest charges.”

The credit card industry gave itself this sweetheart deal by noting in the small print in your contract that your interest rate could be increased for “market conditions,” “the economy,” or “business strategies.” In other words, they can slap you with a higher interest rate just so they can make more money.

The powerful financial services industry hates the tough new credit card rules, which were proposed in May. Our representatives in Congress must advocate for tough new rules that will make sure the deal we’ve been promised is the deal that we get. Now more than ever, we need to make sure the banks aren’t abusing their power to jack up interest rates on the trillion dollars in credit card debt American’s carry.

We’ve already endured the economic fallout from a mortgage industry that changed the rules of the lending game. It’s time we made sure the credit card industry doesn’t do the same.