According to a recent report, Maryland could become the first state in the country to outlaw retroactive changes in credit card interest rates. The propose legislation would “prohibit card companies that change their rates from applying the new rate to debt a consumer already has incurred.”
Card issuers often adjust (i.e., increase) interest rates in response to missed payments or negative changes on your credit report. Unfortunately, even if the cardholder objects to the increase and cancels their card, they’re still on the hook for the higher rate on their existing balance.
Assuming that the Maryland bills passes, it will go into effect this summer, a year earlier than federal legislation that’s aimed to do the same thing. Not surprisingly, the Maryland Bankers Association has vowed to fight the legislation.