Need to address credit card debt as part of the financial crisis

One of the looming issues standing in line to be addressed in the financial crisis is consumer credit card debt. The basic problem is that with consumers losing jobs and facing mortgage payment problems, credit card payments are slipping. A secondary effect is that missing payments or slipping credit scores cause consumer credit card interest rates to rise sharply, which only causes the problem to get worse in a tightening downwards spiral. What is needed is a simple government-sponsored moratorium that temporarily limits credit card interest rates to something in the 5% to 10% range, puts a hold on late fees, and permits consumers to miss payments for the duration of the temporary program. Balances and the modest interest would accrue, but consumers would not be dinged and the credit card firms would not be dinged for delinquent debt during the duration of the temporary program, which might last for six months, a year, or maybe even 18 months, until the U.S. economy is clearly out of recession and clearly expanding at a healthy enough pace for consumers to have new jobs to resume payments, and time for consumer mortgages to get repriced so that consumers are no longer missing credit card payments simply due to difficulties with mortgage payments. Credit card firms should also be under a moratorium to keep delinquent accounts rather than send them to collections during the temporary period.

-- Jack Krupansky