PITTSBURGH (KDKA) – Last year, the Obama administration proposed a plan to restrict how much banks and credit card companies could charge consumers for new credits cards.
Today, the administration backed away from that proposal.
Seniors at the Penn Hills AARP meeting were not happy with the latest news on credit card fees.
“Charging too much and too high a fee is going to defer people from getting a credit card, especially young people just starting out,” said Kip Byerly of Monroeville.
And getting a brand new credit card could cost more, as the Obama administration retreated from a plan to cap what banks could charge for a credit card.
Mary Bach is an AARP consumer advocate sharply critical of the Consumer Finance Protection Agency’s reversal.
“We need more consumer protection, not less these days,” Bach said. “The government makes promises and then because of lobbyists for business it seems as if the consumer comes out on the short end of the stick.”
Bach liked the original plan to cap new card fees at 25 percent of credit offered.
“Without some type of standards as to what fees can be applied, it means that literally the banks and credit card agencies can apply whatever fees they want,” Bach said.
While backing away now, Consumer Finance Protection Agency director Rich Cordray was tougher when KDKA money editor Jon Delano spoke to him in March at the White House.
“There’s a lot of work for us to do to clean up these financial markets for consumers. A lot of consumers were treated pretty shabbily in the lead up to the financial crisis,” Cordray said at the time.
While consumer advocates are critical of any change that imposes higher fees on consumers, those from the banking industry say that it could actually open up more access to credit cards for more consumers.
Duquesne University professor Tom Nist, a former banker, says the decision is a good one.
“The pendulum might have gone too far, as far as what could have been restrictive credit access. Customers that might have gotten credit cards before wouldn’t get one because the banks couldn’t charge an adequate fee,” Nist said.