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U.S. credit card companies have done an end run around tighter credit card laws that take effect in February, Rep. Barney Frank, D-Mass., said.
The companies were given a nine-month grace period before the law took effect -- a law that focuses on retroactively raising rates or fees, but includes not allowing minors to get credit cards without a parent's permission.
The law also mandates companies give 45 days warning before raising interest rates. In anticipation, lenders have just raised rates this year, sometimes to more than 30 percent, The Boston Globe reported Friday.
"I didn't think they would be as blatant as they were about doing this,'' said Frank, chairman of the House Financial Services committee.
"There's no justification for raising rates retroactively. This is really just a way for them to make more money," he said.
"I might have been better off going to the Mafia and getting a loan that way," said Carole Hoppe Mezian of Norwood, Mass., who found her interest rate skyrocket from 14.99 percent to 29.99 percent and her minimum payment jump to $771 in September on a Discover card with a $10,000 balance.
Frank said companies have "abused" the grace period, the newspaper said.
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