Two senators push for greater protection from the Fed on credit card debt

In recent months, many consumers may have found themselves hit with penalty rates and fees for a late payment, which has only added to their ever-mounting credit card debt. And while new Federal Reserve rules will soon be enacted to help alleviate the problem, two U.S. senators say they don’t go far enough.

According to a report from the Associated Press, Senators Charles Schumer of New York and Tom Harkin of Iowa wrote a letter to Federal Reserve Chairman Ben Bernanke, urging him to add extra rules that would prevent credit card companies from hitting consumers who are behind on payments with exorbitant penalty rates.

"Credit card companies can still double or triple the interest rate when a consumer falls two months behind on payments," they wrote.

The senators say that if the new rules, which go into effect on August 22, are not altered to comply with their request, they will seek legislation to compel the Fed to change them, the AP reported.

While these rules do not govern penalty rates, they do prevent credit card companies from charging excessive penalty fees.