Bernanke: Please Stop the Credit Card Squeeze: AG

If you have not looked at a credit card statement recently, pull the latest one out. Look down at the bottom or on the second page to locate the interest rate you’re paying. 

If you just lost your breath, you’re not alone. Many people across the country are seeing hikes in the rate they are paying.

That is why Attorney General Richard Blumenthal asked Federal Reserve Chairman Ben Bernanke on Monday to roll back increases in fees to and interest charged to credit card holders. He wants them to be turned back to January 2009 levels.

Banks are hiking credit card interest rates and fees on creditworthy customers to recoup losses from customers who have lost their jobs and cannot pay the bills, according to Blumenthal and the American Bankers Association.

"The banks are compelling creditworthy consumers to rescue them twice -- once through taxpayer-funded bailouts and a second time through exorbitant credit card interest rates and fees," Blumenthal said.

The Associated Press left a message with a spokeswoman for the Federal Reserve in Washington on Monday, seeking comment.

Credit card issuers are coping with historically high defaults as consumers and the value of loans removed from the books and charged against loss reserves was 10.2 percent in the third quarter of last year, according to the Federal Reserve and the American Bankers Association.

That was up from 5.7 percent in the same quarter in 2008 and about 4 percent in the comparable periods in 2007 and 2006.

"While there are a number of factors that contribute to rate increases, current increases are primarily a function of the significant number of borrowers nationwide who are not repaying their bills and the continued increased risk of nonpayment in the future," Edward L. Yingling, president of the bankers association, wrote to Blumenthal last month.

Credit card loans are "enormously risky" because they are unsecured, he said.

However, Blumenthal said banks are drastically raising credit card fees and interest rates in advance of new federal rules that take effect Feb. 22.

Copyright AP - Associated Press
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