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We Should Take Second Look at Credit Card Rates

October 15, 1989

As a major opponent of legislation to remove California's 25-year-old ceiling on retail credit card rates, I read with interest and concern your recent article, "Rate Deregulation Has Cost Consumers $100 Million" (Sept. 15).

In 1959, the Unruh Act was enacted in response to a number of consumer abuses, including excessive interest rates, which were routinely between 39% and 81% at the time.

Unfortunately, at the urging of the retailers, the legislature last year passed and the Governor signed a bill that repealed portions of the Unruh Act, deregulated retail credit cards and removed the interest rate cap on these cards.

I strongly opposed this bill because experiences in other states have shown that deregulation results in increases in interest rates on retail credit cards, without any resulting benefits to consumers in terms of greater credit availability.

In fact, the issuance of new credit declined by two-thirds in New Jersey after deregulation. In New York, interest rates went up between 15% and 20%.

The record is devoid of any evidence supporting higher retail credit card interest rates. For the sake of California's consumers, perhaps we need to take a second look.


Los Banos

The writer is an assemblyman in Northern California.

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