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Massachusetts Credit Card Issuers Interest Rates
Massachusetts' top securities regulator said on Thursday he has asked some of the nation's biggest credit card issuers to provide data on whether they adjusted interest rates in the last months.
William Galvin, the state's Secretary of the Commonwealth, is requesting the information after interest rates on some credit cards have surged on the eve of more stringent federal regulations taking effect next month.
Galvin, who has cemented his reputation as a tough regulator through investigations into auction rate securities and market timing, has given the seven companies until Jan. 26 to reply.
American Express (AXP.N), Bank of America (BAC.N), Charles Schwab (SCHW.O), Citigroup (C.N), Citizens Bank, Fidelity Investments and Morgan Stanley (MS.N) all received three-page letters asking them to identify any changes they have made to rates since May 2009. The letters went to major broker dealers who issue their customers credit cards themselves or through an affiliated bank.
Specifically Galvin wants to know if fixed rate cards have been changed to variable interest rate cards and what rate increases may have been imposed on credit card holders.
A study by The Pew Charitable Trusts, an independent nonprofit, found the median interest rate advertised by most credit card companies in July 2009 was 13 to 23 percent higher than rates in December 2008.
"Increasing fees and hiking rates on credit cards before the federal law fully takes effect in February goes against the intent of the Congressional act," Galvin said in a statement.
"When the credit cards, and the abusive new practices being put in place, are tied to securities broker-dealers, there is a question whether they are acting under the high standards of commercial honor and the just and equitable principles of trade," Galvin wrote.
Next month new regulations are expected to take effect that would make it tougher for companies to adjust their credit card agreements.
Morgan Stanley declined to comment.
A Fidelity spokesman said the company will respond to the request. He noted, however, that the company does not issue credit cards directly.
Spokespeople at Citi, Bank of America, Citizens, Charles Schwab and AmEx were not immediately available for comment.
Abogados January 15, 2010 08:11 AM | Hipotecas | Preguntas Para Abogados
