Fed Rejects Common Sense - Retroactive Rate Increase Cool with Them

Fed rejects request to end retroactive interest rate increases

WASHINGTON (Reuters) - The U.S. Federal Reserve rejected a request to force credit card companies to immediately halt retroactive interest-rate increases on existing balances, Democratic Senator Charles Schumer said on Tuesday.

Schumer and Christopher Dodd, who chairs the Senate Banking Committee, asked the Fed last month to use its emergency powers for rescuing banks to also help credit card consumers being slapped with unexpected rate increases.

"The Federal Reserve's failure to protect consumers from these outrageous rate increases is unconscionable," Schumer said.

Editor's Thoughts:  So let's say you decide you "may" want to purchase a 52" LCD HDTV.  Part of the decision process to "buy" is that you have a 5.9% rate on one of  your credit cards.  So you make the purchase.  Then, the credit card company hikes your rate to 19%.  If it was 19% at the time of the purchase, you wouldn't have made the move.  It was BECAUSE you had a 5.9% rate that you did.   It only makes complete and logical sense that retroactive rate increases are ridiculous. 

What would happen if you decided to buy a $35,000 car because they advertised 0% financing and 6 months into the purchase, they changed the rate to 19%?  What's the difference?  Why did the Federal Reserve reject this request?  It doesn't seem to make sense.