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Home / Government / Fed says banks eye tighter terms on credit cards (1:20 p.m. 11/9/09)

Fed says banks eye tighter terms on credit cards (1:20 p.m. 11/9/09)

By JEANNINE AVERSA

AP Economics Writer

WASHINGTON (AP) — The Federal Reserve says many banks expect to tighten terms on credit cards in response to a new law that aims to protect consumers from sudden rate hikes.

A quarterly survey by the Fed found that many banks expect to increase rates, reduce credit limits and raise annual fees for both prime borrowers — those with sound credit histories —as well as more risky “non-prime” borrowers, who have tarnished credit.

Banks already have been pushing through rate increases in anticipation of the new rules. Because of that, the House recently approved legislation to speed up the law’s effective date and have the provisions take effect immediately, although prospects are dim for Senate passage.

Most of the new credit card provisions are slated to take effect on Feb. 22.

One comment

  1. So, let’s see if I understand this…There is a new law to protect consumers from ‘sudden rate hikes’. In response, the banks are going to push through….a bunch of sudden rate hikes. OK…I’m confused.

    Sort of like being forced to use more efficient light bulbs, then the utilities hike those rates because their profits are down since we’re not using as much electricity. OK…still confused?

    I thought the purpose of all the federal stimulus money, and bailout money, was to make it easier for people to access loans \ credit to spur the economy….guess not.

    Is this part of the hope? or the Change?

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