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CREDIT CARD CAP PROPOSAL PRESENTS RAW DEAL FOR CONSUMERS

     CREDIT CARD CAP PROPOSAL PRESENTS RAW DEAL FOR CONSUMERS
    COLUMBUS, Ohio, Nov. 15 /PRNewswire/ -- As many as one out of every two bank credit card holders could lose their card if legislation capping interest rates goes through.
    Up to 60 million consumers could be affected by the proposal to limit to 14 percent the amount banks can charge on unpaid balances, according to the Ohio Bankers Association (OBA).  The result would be a credit contraction that could push the country into a deeper recession. Tens of billions of dollars in credit currently available would be withdrawn.
    "People who question the interest rates on cards overlook the fact that the product's convenience and reliability depend on a highly sophisticated and costly telecommunications network.  The convenience of cards to consumers means a high degree of risk for banks.  Fraud, delinquencies and bankruptcies are all up significantly," Michael M. Van Buskirk, executive vice president of the Ohio Bankers Association, said.
    Although the Senate proposal is part of a larger financial reform package whose fate is uncertain, the House is preparing to rush through a bill of its own to cap card rates.
    "History has shown that price controls, including interest rate caps, just don't work, no matter how appealing they may seem on the surface," Van Buskirk noted.  "Those particularly affected are low- and moderate-income consumers and those with short or no credit histories."
    "We'd all like to pay less today for a new car.  But if Congress capped their cost at $10,000, what would happen?"  Van Buskirk asked. "The same will be true for credit cards if this legislation passes."
    The Ohio Bankers Association, headquartered in Columbus, provides commerical banks across the state with legislative, educational and communications services.  Organized in 1891, it persently serves 282 of the 289 banks in Ohio.
    -0-                       11/15/91
    /CONTACT: Brenda R. Landis of OBA, 614-221-5121/ CO:  Ohio Bankers Association ST:  Ohio IN:  FIN SU: LC -- CL010 -- 1667 11/15/91 15:34 EST
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Publication:PR Newswire
Date:Nov 15, 1991
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