WASHINGTON – Two lawmakers in Congress are prodding the Federal Reserve to provide more protection so that credit card users don't get socked by exorbitant interest rates when they fall behind on their payments.
"Credit card companies can still double or triple the interest rate when a consumer falls two months behind on payments" despite new Fed rules, Sens. Charles Schumer, D-N.Y., and Tom Harkin, D-Iowa, said Tuesday. They made their case in a letter Tuesday to Fed Chairman Ben Bernanke.
The lawmakers want the Fed to alter the rules, which take effect Aug. 22, to prevent big rate hikes under such circumstances. If the Fed doesn't act, Schumer and Harkin said they'll seek legislation to compel the Fed to do so. Both lawmakers have championed measures in Congress to provide consumers with stronger protections.
The Fed had no immediate comment on lawmakers' request.
Congress directed the Fed to implement the new rules in a sweeping law enacted last year.
In writing the rules, the Fed interpreted the law as covering fees and charges — not interest rates.
The Fed rules, among other things, bar credit card companies from charging a penalty fee of more than $25 for paying a bill late. They prohibit credit card companies from charging penalty fees that are higher than the dollar amount associated with the customer's violation. They also ban so-called "inactivity" fees when customers don't use the account to make new purchases.