Senator Proposes Interest-Rate Cap to Quash Credit Card Industry's 'Culture of Greed'

PHOENIX, AZ--(Marketwire - May 14, 2009) - Crippled by mounting defaults and lethargic consumer spending, credit card companies have been hurling a barrage of fee increases and interest-rate hikes at their cardholders. And as these higher rates and fees cause many cardholders' payments to balloon out of control, a growing number of debt-ridden consumers are seeking help from debt relief companies like Think Debt Relief.

Struggling consumers may soon get some additional help with credit card debt, thanks to Sen. Bernie Sanders of Vermont. The Independent senator has proposed legislation that would cap interest rates on all consumer lines of credit, including credit cards and mortgages, at 15 percent. The bill would allow for a federal rate cap by overruling a 1978 Supreme Court decision that currently allows states to determine their own interest-rate policies.

With no federal law currently in place to impose uniform national controls on interest rates, many financial services companies have established headquarters in states that don't cap interest rates -- notably South Dakota and Delaware -- from which these companies are free to charge credit card rates that now often run as high as 30 percent.

Credit card issuers argue that they've needed to raise their rates to make up for record-high defaults -- the national default rate on credit cards has climbed 23 percent over the last three months. This squeeze on cardholders, however, comes at the same time that major card-issuing banks are taking billions in taxpayer bailout money -- in some cases, Sanders points out, even receiving zero-interest loans from the Federal Reserve.

Consumers can no longer afford to pay the price for this industry's "culture of greed," Sanders says, as families hit hard first by the recession, and now by "absurd" interest rates, increasingly turn to credit card debt settlement programs and other debt relief services for help.

"Right now, there are millions and millions of people who are paying outrageously high interest rates on their credit cards," Sanders says. "We think enough is enough."

Sanders acknowledges that the banking industry's powerful lobbyists will fight his proposal, but he's ready with a defense: His bill is modeled after existing federal regulations that have maintained an interest-rate cap on federally chartered credit unions for the last 30 years.

"Obviously, this is a pretty radical act, and it will be fought," Sanders says. "But I think the American people are disgusted with the financial industry. They want change."

About Think Debt Relief

Think Debt Relief, www.ThinkDebtRelief.com, is an experienced debt relief company offering a range of debt relief programs, including debt settlement, credit counseling, and mortgage loan modification services.