While the Congress wants to help credit card holders achieve some fairness in their relationships with credit card companies, their efforts (H.R. 627, S.414) will not fully help the consumer. The credit card consumer is at the mercy of the credit card companies. The popular thing to say is that the consumer has the right to decline to accept a credit card and look at the competition. Yet, in truth, the average consumer cannot negotiate the terms of contracts today. Most contracts are contracts of adhesion (take it or leave it terms).
Credit card companies are given a degree of latitude in setting interest rates without regard to a state’s usury law (12 usc sec.85, Marquette v. First Omaha Service Corp.). That is a profound power, which requires an equally profound responsibility to avoid abuse. With interest rates that could approach 30% or more, with the federal funds rate at 0 to 0.25%, the credit card companies have collectively decided to act licentiously. As a result, then, the power to set interest rates must be regulated again in the face of the credit card companies’ terrible failure to exercise self-control.
However, this scope of the power will not be a part of the so-called reform of the credit card industry because so many politicians (House, Senate) get campaign money from these same firms. Thus, the credit card reform bill presently being rushed through Congress will address some abuses but not really get to the root of the abuses, namely the setting of interest rates.
The Senate rejected an amendment (S. Amdt. 1062-Sanders) to the Credit Cardholders Bill of Rights Act, H.R. 627. The amendment was proposed to set a national interest rate limit of 15%.