Baldwin on Credit Cards

Representative Tammy Baldwin recently issued a press release entitled Cracking Down on Credit Card Companies and which included this item:

A woman from Madison wrote to say that the 2 percent she’d been required to pay each month on her credit card balance had suddenly been raised to 5 percent. “It has doubled our payment and it will be nearly impossible to keep up with my payments,” she said.

Without any additional details, this sort of fragmentary anecdote seems like a flimsy reason to crack down on anyone,credit card companies included, so I sent the following email to Baldwin's office:

Ms. Goodman,


This recent press release from Congresswoman Baldwin's office included this item:


A woman from Madison wrote to say that the 2 percent she’d been required to pay each monthon her credit card balance had suddenly been raised to 5 percent. “It has doubled our paymentand it will be nearly impossible to keep up with my payments,” she said.


While I am sympathetic to the plight of those who have been negatively impacted by circumstances beyond their control, I'm not sure this fits that category. Wouldn't it be more accurate to say that a person unable to make a payment of 5% of her outstanding credit card debt each month has too much credit card debt?


Perhaps you can share some additional details of this woman's story that could add needed context to this press release. Otherwise it just seems like Ms. Baldwin is fighting to protect people from the consequences of their own bad choices.


I do want to say that I do not live in Ms. Baldwin's district, but I am aware that she may have aspirations for statewide office, perhaps replacing Senator Kohl. Any information you could share on that matter would be greatly appreciated.


Jeremy R. Shown
De Pere, WI

No response yet, but I did see that Paul Ryan is considering a run for Senate in 2012 (H/T Fox Politics).

Frozen Rates or Frozen Credit?

Senatus:

Credit card rates “would be immediately frozen under new legislation introduced Monday by Senate Banking Committee Chairman Chris Dodd (D-Conn.),” The Hill reports.

“We worked long and hard to enact the safeguards included in the Credit CARD Act,” Dodd said in a statement. “And no sooner had it been signed into law, but credit card companies were looking for ways to get around the protections this Congress and the American people demanded. This bill would end those abuses and further protect customers today.”

But is the behavior of card issuers an attempt to "get around" Congressionally imposed rules? The Market Ticker (H/T Dad29) has a different take (his emphasis):

• Citibank's credit-card terms change implies a willingness to accept and even provoke a complete and intentional destruction of their credit card business as a very high probability outcome, given that nobody in their right mind will accept a 30% interest rate who has an alternative. The obvious implication is that only those who can't transfer balances out will remain and if your credit is that impaired there's a good chance you will default - either intentionally or otherwise. This too implies foreknowledge of a near-complete impending freeze in the credit markets.
  
  
• The change in terms on credit accounts is NOT confined to Citibank. I have received a fax from a customer of Infibank with substantially identical terms, in which both the standard and penalty rate was adjusted to 29.99%. This strongly implies that whatever Citibank smells the problem is not confined to them.

Two very different views on what the change in credit card rates indicates. This will be one to watch.