Wells Fargo raises credit card interest rates

The Credit Card Accountability Responsibility and Disclosure Act (CARD), which was passed by Congress earlier this year, will limit how credit card companies can raise interest rates on consumers when the second part of the legislation takes effect next year. But before that can happen at least one bank has chosen to increase consumers' rates in a step many feel is in response to the new law.

Last week Wells Fargo announced that it would be raising the rates on many of its customers by 3 percent, but the company says the rate change is not a reaction to the legislation.

"This is something we've been contemplating for quite a period of time," Kevin Rhein, head of card services for the bank told Bloomberg, following the announcement.

In a release, the bank said it "took this action at this time in order to continue offering our credit card products to the greatest number of customers possible and keep credit flowing."

Wells Fargo's news comes just days after Bank of America wrote a letter to Connecticut Senator Chris Dodd saying it would not change its terms or pricing on credit card accounts before the start of the Credit CARD Act in February.

For his part, Dodd said other credit card companies should take Bank of America's lead in holding off on rate increases before the start of next year's law.

"Every other credit card company should follow suit," said Dodd. "This Congress has made it clear that abusive credit card practices are no longer acceptable."

When the second part of the Credit CARD Act takes effect in February, it would prohibit credit card companies from increasing APR, fee or finance changes in the first year an account is activated and require that promotional rates last for at least six months.

More Credit & Debt Articles | News Home | Discuss in our Forum