Bank and credit regulators will vote Thursday whether to restrict what credit card companies can do with customers in raising interest rates and charging fees. The Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration are expected to vote on the new provisions.
Reports say regulators are considering prohibiting companies from having the ability to change cardholder interest rates for any reason. Restricting the so-called universal default rule is also under consideration. Credit card companies have the ability to raise interest rates if the borrower fails to pay bills other than the credit card bill.
While some believe the move could protect consumers others believe it could hurt. "This would result in shrinkage of the subprime market. People who really need the money but have bad credit won't have access to credit cards," said Paul Richard of the Institute of Consumer Financial Education.
But Richard believes regulators will not vote to restrict credit card companies. "This is an agreement between the company and the consumer. That would be an intrusion on the free market syastem," he said.
