Credit card firms get squirrely ahead of new federal rules

Credit card firms get squirrely ahead of new federal rules

Wednesday, July 08,2009 04:43 AM

Banks are quietly changing the terms of millions of credit card accounts as they brace for a tough new law that will limit rate hikes.

The law would restrict interest rate increases unless a credit card has a variable rate. So at least two major lenders are switching their cards with fixed rates to -- you guessed it -- variable rates.

"It's completely unfair," said Linda Sherry, a spokeswoman for Consumer Action. "It's an end run around the intent of the new law."

That law is the Credit Card Accountability, Responsibility and Disclosure Act, which President Obama affixed with his signature in May. Its various provisions will be phased in between next month and February.

Congress passed the law to curb what politicians called abuses of cardholders by lenders, including runaway interest rates and constantly changing terms.

In response, banks have scrambled in recent weeks to make changes to their card offerings before the new rules take effect. I wrote last week about how JPMorgan Chase is increasing its monthly minimum payment to 5% from 2% of the balance for about 1 million cardholders.

Now comes the looming demise of fixed-rate accounts.

Read the whole thing at http://www.latimes.com/business/la-fi-lazarus8-2009jul08,0,7497516.column