Credit Card Interest Rates Under Scrutiny

Credit card companies are feeling the heat tonight... As government officials step in to protect consumers.

The federal reserve took action to stop card companies from arbitrarily raising interest rates.

Bob Smith relies on his credit cards to help run his business... And was shocked when he opened his statement and saw his interest rate had skyrocketed.

Smith says, "Our interest rates are normally very low, and we got our statement one month and our interest rates shot up. To an increase of about 12 percent jump."

Smith says he immediately contacted the card company...

"They said we sent you out a notice a couple months ago saying we were going to go up. But I never recalled seeing anything that said they were going to increase that much."

The Federal Reserve, along with other regulators are now trying to put a stop to increases like that... Along with making it mandatory to allow borrowers adequate time to pay their bills.

Smith says he now is relying less on his cards until these measures pass... All because he says in today's economy he can not afford to be caught off guard like this again.

"If we are caught will a big bill and not knowing we will be charged a large amount of interest then we are going to lose money because we are not going to have any money to recover that interest."

The new regulations are not expected to be completed until the end of the year and will face a tough fight from the banking industry.