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Rate-cap amendment fails, although debt consolidation may present lower interest levels
By Marvin Milner on May 21st, 2010
Rising interest rates affected many consumers during the recession, a trend that continued as lenders faced new restrictions regarding credit cards.
To fight some of these increases, Rhode Island Democratic Senator Sheldon Whitehouse recently introduced an amendment to financial reforms that would force lenders to abide by state-mandated caps on interest rates. However, that measure was recently voted down by the Senate.
Federal regulations are such that credit card companies follow interest rate caps of the states in which they are located, rather than those prescribed by their customers' home states. The current rules are the result of a 1978 decision from the Supreme Court that led to a particular interpretation of the National Bank Act of 1863.
Whitehouse said that he will continue to work to get his legislative goals passed.
"It is long past time we stop allowing these Wall Street banks and their credit card subsidiaries to take advantage of struggling families in Rhode Island and across the nation," Whitehouse said.
Many consumers may have seen their interest rates increase in the past year as card companies worked to offset new requirements from the Credit Card Accountability, Responsibility and Disclosure Act. However, people who find they can't deal with these high rates may consider debt consolidation, which can lead to them being lowered.
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