The banks have had nine months to creatively increase the real cost of borrowing: Robert Manning on Credit Card Nation

2/24/2010 The banks have had nine months to creatively increase the real cost of borrowing: Robert Manning on Credit Card Nation

Just as we demand credit card users to act responsibly, we demand that credit card companies act responsibly too - President Obama's words on May 22, 2009 before signing the Credit Card Accountability, Responsibility and Disclosure Act (CARD).

The CARD Act finally took effect on Monday, Feburary 22. It prohibits some of the worst industry practices including billing systems that generate finance charges on paid-off balances, some retroactive interest-rate increases and unrestricted marketing to consumers under the age of 21. But in the nine months since May, credit card companies have found new ways to increase their profits from consumer borrowing despite the CARD Act including annual fees, cutting credit limits, hiking interest rates and various hidden charges. On Tuesday, Robert Manning discussed the CARD act on DemocracyNow!. Robert Manning is the author of Credit Card Nation: The Consequences of America’s Addiction to Credit. and the founder of the Responsible Debt Relief Institute.

This would have been a great bill when it was first discussed about seven or eight years ago, but in the depths of this recession and the fact that there is no usury law and there are not any fee caps, and the fact that the banks had nine months to creatively increase the real cost of borrowing,... most Americans...are going to be shocked at how limited the help is, offered by the CARD Act...It’s one thing to be able to be told how long it’s going to take you to pay off your bill. It’s another thing to find out that your interest rate’s been doubled from 15 percent to 29.9 percent...[and] it’s happened already in the nine months preceding the implementation of the act...This is a fee-driven industry now. The effort to disconnect risk and lending and transfer that risk to investors means that banks make more and more of their money...in late and penalty over-limit fees. Banks are going to be charging annual fees....Any benefit that you get is going to come with a fee. - Robert Manning, speaking on DemocracyNow!.

Credit Card Nation
Robert Manning
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Financing the American Dream
Lendol Calder
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