Don and Samantha Moore of Guilford were just three days late on their credit card payment this past January.
Samantha Moore said that she expected to pay a late fee, but she never expected the company to reduce her line of credit from $31,500 to $4,500, and increase the interest rate from 12 percent to 27 percent. After several phone conversations with the credit card company, Moore said the family was unable to get the company to reconsider
“If you protect consumers then economic growth and economic development will occur,” Dodd said at Trinity College press conference.
He said for many years people believed that if you engaged in consumer protection it would be bad for economic growth. “Consumer protection is good for economic growth,” he said.
It’s when you deviate from consumer protection that you wind up with the type of situation we’re in today, he said.
He said there are several ways credit card companies and banks are able to sneak in hidden fees or interest rate increases.
Under the current system if you had a balance of $1,000 on a credit card and you paid off $900, the company may continue to charge you interest on the $1,000, not the $100 balance, he said.
He said the legislation also prevents something called “universal default.” This means a credit card company won’t be able to increase a cardholders interest rate, if the cardholder defaults on a telephone, utility or any other bill that’s not related to the credit card.
Attorney General Richard Blumenthal thanked Dodd for his leadership on this issue.
“This supposed dichotomy between free enterprise or business health and consumer protection is a false dichotomy,” Blumenthal said. “Consumer protection builds strong, better, more successful businesses.”
But convincing his colleagues on Capitol Hill that increasing credit card regulation is good for the economy may not be easy.
Dodd said currently the lending institutions are fighting back hard against changes to bankruptcy protections for homeowners.
“I thought we’d have an easy time getting that through,” Dodd said. “As of today we’re going to try to bring it up, but it’s going to be tough.”
“The lending institutions are pushing back very hard against these issues,” he said.