Senator Boucher Calls For Study Of Credit Card Fees & Interest Rates

February 18, 2009

Proposed Legislation Would Require General Assembly’s Banks Committee To Conduct Study

Senator Toni Boucher (R-26) recently testified before the General Assembly’s Banks Committee in favor of her proposed legislation calling for an analysis of the range of credit card fees and interest rates charged consumers.

Under her proposed legislation, SB 173, An Act Concerning a Study of Usurious Credit Card Rates, the analysis would be completed by the Banks Committee.

“I recognize most credit card companies employ best practice procedures regarding the interest rates they charge consumers. However, in response to several constituents’ complaints regarding perceived interest rate gouging on their credit cards, I believe we need this study,” said Senator Boucher.

Senator Boucher said that several constituents have contacted her about what they believe to be inexplicably high credit card fees and interest rates. She said she has heard from individuals who pay off their credit cards each month, leaving a zero balance, yet find that the interest charged them over the course of a year is as high as 50 percent. Senator Boucher said that, at first glance, this does not make sense considering that the federal reserve rate is set at one percent and the prime rate at four percent. Senator Boucher said that a comprehensive analysis of these fees and rates would provide answers for consumers and useful information for legislators.

“Constituents have told me about interest rate assessments of more than thirty percent on unpaid balances without proper notification or explanation of these unusually high charges. We need to have a discussion about how these rates and fees are determined. This study would provide a better understanding to the General Assembly and the public regarding credit card interest rates and assessments. An analysis should identify the reasons behind the perceived abnormally high fees and rates, and provide recommendations to increase transparency and communications between credit card companies and their customers,” said Senator Boucher.