Credit Card Execs Grilled Over Rate Hikes

Lawmaker threatens legislation to stop sudden increases
By Matt Cantor,  Newser User
Posted Dec 4, 2007 6:55 PM CST
Bank of America Card Services President Bruce L. Hammonds, center, listens to testimony from consumers Bonnie Rushing of Naples, Fla., right, and Janet Hard of Freeland, Mich., left, on Capitol Hill in...   (Associated Press)
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(Newser) – Lawmakers grilled credit card execs today over the practice of hiking interest rates on customers who pay on time, the AP reports. Senator Carl Levin called it unfair, but Bank of America and Discovery execs said that factors like credit scores also affect rates. "It's important criteria for how to manage risk and pricing," said Discovery President Roger Hochschild.

Consumers also testified, including one who said her Discover rate almost tripled without adequate notice. Facing the threat of legislation, three of five major companies have agreed to a policy change; Discovery and BofA are still holding out. But Levin held his ground, saying rates must hold steady if "the cardholder holds up their end of the bargain."